Smurfit Kappa chief executive Tony Smurfit has said he is comfortable with analyst earnings forecasts for this year, which predict growth of as much as 10 per cent.
Speaking to journalists after the company AGM today, Mr Smurfit said analysts expect the company’s ebitda to rise to between €1.25 billion and €1.3 billion from 1.18 billion last year.
He also said the company could make acquisitions of up to €400 million a year without negatively impacting its balance sheet. He said the US is an area where they’d like to do more deals.
The cardboard box maker this morning reiterated it expects to deliver “good earnings growth” this year after posting a 6 per cent increase in operating profits in the first quarter.
Revenues rose 2 per cent to €2 billion, the company said in a statement before its annual general meeting in Dublin on Friday.
“Ebitda growth was driven by an improved operating performance and the positive impact of acquisitions completed in 2015,” Mr Smurfit said. “We continue to see good levels of demand for packaging across almost all the markets in which we operate.”
Smurfit Kappa, whch is expected to join the UK’s FTSE 250 index after moving its premium listing to London this year, recently announcing a price increase on a class of containerboard used for cardboard boxes, known as kraftliner. The move surprised analysts, including Barry Dixon at Davy, given that the industry had been dogged by price weakness in late 2015 and early 2016.
Net debt at the group fell to €3.03 billion at the end of March from €3.05 billion in December. Smurfit Kappa sees its debt level falling from 2.5 times ebitda to fall over the course of the year as recent acquisitions boost earnings and cash flow.
“The reiteration of guidance will ease any potential concerns around full-year forecasts,” said Goodbody Stockbrokers in a note issued after the results were published, affirming its buy recommendation on the company’s stock.
Smurfit Kappa said that it has capacity for further acquisitions, following €380 million of deals in 2015. It is also currenly spending over €450 million a year on capital investment across the business.
In Europe, Smurfit Kappa’s underlying cardboard box sales volumes rose 2 percent. Volumes in the Americas rose 26 per cent, driven by the acquisitions.
