Strong end to the year helps Smurfit Kappa beat forecasts

The paper and packaging giant reported earnings before interest, tax, depreciation and amortisation of €1.51bn for the year to 31 December, 6% down on 2019 but ahead of guidance. In November, Smurfit Kappa said full-year EBITDA was likely to come in between €1.46bn and €1.48bn

The EBITDA margin was 17.7%, down slightly on 2019’s 18.2%.

Revenues eased 6% to €8.53bn, while operating profit before exceptional items fell 13% to €922. Pre-tax profits were ahead 10% at €748.

Tony Smurfit, chief executive of the Dublin-headquartered blue chip, said 2020 had been "the most challenging year in recent memory", with the lower earnings reflecting both a fall in box prices and the impact of the Covid-19 pandemic.

However, he continued: "Both Europe and America had strong demand in the fourth quarter, offsetting significantly higher input costs, predominantly in recovered fibre.

"Driven by strong secular trends, such as e-commerce and sustainability, the outlook for our industry is increasingly positive.

"While there remains some uncertainty on the impact and duration of Covid-19, the year has started well with the continuation of the demand trends seen during the last quarter. Reflecting the board’s confidence in this performance and prospects for the business looking forward, the board is proposing an increase in the final dividend, of 8% to 87.4 cents per share."

Smurfit Kappa said it had repaid all Covid-related government support schemes.

It has also made a "unique reward" to all permanent employees, in recognition of their response to the pandemic, at a cost of €11m. That was taken as an exceptional charge, along with €35m to cover redundancy and reorganisation costs in America and Europe. The one-off costs were partly offset by an exceptional €15m gain on the UK pension scheme, however.