SMURFIT KAPPA closed down 3.6 per cent yesterday at €7.78 after the company said the risk of having its assets in Venezuela nationalised had increased since president Hugo Chavez lost his two-thirds majority in parliamentary elections.
Venezuela represented about 4 per cent of Smurfit Kappas revenue in the first three quarters of this year and 4 per cent of total assets, according to the company.
The drop in the company’s share price – undoing the strong performance by the company’s share price over the last two months – occurred despite the packaging company reporting third quarter pre-tax profits of €41 million yesterday, compared to a €40m loss for the same period last year.
Revenues at the Dublin-listed company grew by 12 per cent to €1.7 billion in the three months to September 2009, up from €1.5 billion last year .
The company said EBIDTA (earnings before interest, taxes, depreciation and amortisation increased by €243 million in the third quarter, representing an improved earnings margin of 14.3 per cent.
Noting “continued corrugated price recovery” going into the final quarter of 2010, the company reiterated its expectation of earnings growth of approximately 20 per cent for the full year. It also predicts a further reduction in its net debt to earnings ratio.
Net debt was reduced by €168 million in the third quarter to €3.124 billion – a cut of 5 per cent in the three month period, due to favourable currency movements and strong cash generation, the company said. Smurfit Kappa operates in 21 countries in Europe and nine countries in Latin America.
