Irish packaging group Smurfit Kappa posted a 30 per cent drop in first-quarter core profit this morning and said the ongoing uncertainty in the global economy made forecasts difficult.
The group, one of the world's biggest makers of paper and cardboard packaging, said earnings before interest, tax, depreciation and amortisation (EBITDA) before exceptionals slipped to €180 million in the three months ended March 31st from €257 million a year before.
"In a difficult operating environment, we are pleased to report resilient EBITDA margins and continued strong cash flow management," chief executive Gary McGann said in a statement.
At 10.10am shares in Smurfit Kappa were up 2.4 per cent at €2.72 giving the company a market value of €594 million. Shares in the company have risen 50 per cent since the start of the year but remain down 66 per cent compared with the same day 12 months ago. Revenue in the first-quarter was €1.5 billion, down 18 per cent.
The global economic slowdown has weighed on consumer demand, adding to the woes of a European paper industry already suffering from years of overcapacity which has pressured prices.
Smurfit said revenue fell as a result of the impact of the weak macro environment on both volumes and price but saw signs of increasing capacity rationalisation.
Smurfit Kappa, whose products include industrial boxes and trays for perishable products such as fruits and flowers, said its focus remained on maximising cashflow generation and net debt reduction.
The group said it was on target to achieve its full-year objective of reducing capital expenditure towards 60 per cent of depreciation, and together with further input cost relief, especially for energy and wood, it would deliver their full benefit in the latter part of 2009.
Smurfit Kappa, which listed on the stock market in March 2007 and has operations in over 31 countries, said it also increased its full-year formal cost takeout target to €130 million for 2009.
Its balance sheet remained strong, it said, reporting in excess of €700 million of cash with no material debt maturity - of a net debt at almost €3.2 billion - due until 2012.
In a note to investors Bloxhams said the results were in line with expectations and helped by a strong performance by its Latin American operations. As announced in February it will not be paying a dividend this year.
On the basis that the firm has benefited from a strong recent run along with a rally in cyclical stocks, Bloxhams said its EBITDA expectations remain at the 700 to €720 million level for the full year.