LISTED PACKAGING group Powerflute, which is headed by Irishman Dermot Smurfit, has increased its dividend by 30 per cent after posting strong results for 2011.
Shareholders will receive a €2.9 million dividend payout – 1.3 cent a share for a 5 per cent yield – with Mr Smurfit and his brother Michael being the main beneficiaries.
Dermot Smurfit owns 15.6 per cent of the business and will get a dividend of about €452,000, while Michael owns 21.2 per cent through an investment vehicle called Bacchantes Ltd and will receive around €615,000.
Powerflute yesterday reported a 15 per cent rise in revenues to €121.5 million for 2011, while its operating profit more than doubled to €14.3 million.
The company generated cash proceeds of €32.5 million from the sale of its loss-making Graphic Papers business in May of last year. It closed the year with a net cash position of €19.1 million compared with net debt of €29.1 million in 2010.
Powerflute also announced yesterday its plans to scrap its secondary listing in Finland and to implement a share consolidation by purchasing up to 25 million shares or about 8.6 per cent of its issued share capital.
Mr Smurfit said the company would save about €200,000 by delisting in Finland, where its stock was illiquid.
He also stated his view that Powerflute’s shares were “seriously undervalued” at present. They trade in London at 26p a share.
Asked if he had considered taking the company private, he said: “No, not in any serious way.”
The company said it benefited last year from improved demand in most markets and “attractive pricing levels”.
“The whole box business is holding up reasonably well, and we seem to be in one of the sweet spots in the market,” Dermot Smurfit told The Irish Times.
Most of Powerflute’s boxes are produced for fruit and vegetable products. “These markets are not declining,” he said.
With Powerflute in a strong financial position, Mr Smurfit said it would consider potential acquisition opportunities up to €100 million. “Just recently we walked away from something. We just felt we wouldn’t bring enough to the table.”
Mr Smurfit said demand was “holding up” for Powerflute’s products and that its order book was in “good shape”.
“So far so good this year,” he added.
