SMURFIT KAPPA’S share price tumbled more than 4 per cent yesterday after its first quarter results missed consensus expectations.

The paper and packaging group reported a 32 per cent rise in earnings before interest, tax, depreciation and amortisation (Ebitda) to €243 million, even though margins were squeezed as input costs rose more sharply than expected.

Revenues were 18 per cent higher year-on-year at €1.8 million, with the group reporting strong demand growth for the first three months of the year.

Speaking after the group’s fourth annual general meeting since it was taken public in March 2007, chief executive Gary McGann said it may have to increase pricing due to very significant cost pressures.

Meanwhile chairman Liam O’Mahony said the group remains “relentlessly focused” on deleveraging, after cutting its net debt by €49 million in the first quarter. This reduction brought its net debt to Ebitda ratio to 3.2, down from 4.2 a year earlier. This ongoing deleveraging, and an improvement in cashflow, will expand the group’s range of strategic and financial options, it said.

As well as continuing to pay down debt, Mr McGann said funds freed up would also be reinvested in the group’s businesses, “where we’ve [already] driven good cost-saving efficiencies”. It will also consider investing cash in acquisitions. “To grow and enhance the value of the business for shareholders we need to be looking for growth opportunities outside the company as well and that’s on our radar screen,” he added.

It is also hoped that the deleveraging strategy will, in time, enable the group to remove its suspension of dividend payments, which was introduced in 2009. “We see that as unfinished business,” Mr McGann said.

“It was a painful decision to defer but we felt it was the right thing at that time,” Mr O’Mahony said. There is no plan for an immediate return to dividend payments, but “we see ourselves as a dividend-paying company at the appropriate time”, he said.

Davy stockbrokers maintained its outperform rating on Smurfit even though its results came in below expectations. “The better-than-expected reduction in net debt levels gives us greater confidence in the upside to the share price, which we believe is too low,” it said in a morning note.