SMURFIT KAPPA DOING BETTER THAN COMPETITORS, SAYS CEO - Smurfit Kappa has reported a 73% drop in pre-tax profits to €39m for the first six months of this year. The company's revenues fell by 18% to €3 billion and its operating profits are down in what the group calls difficult conditions. The paper and packaging company has operations in over 20 European countries, and more in Latin America. 2009 has been a tumultuous year for the group. Its shares are now at around €4.20, having hit a high of €5.25 and a low of €1.01 in the past 12 months. The group's market cap is almost €1 billion.
Gary McGann, Smurfit Kappa's chief executive, says the significant drops in profits and revenues are reflective of the general global economy in which the company operates. The firm effectively packages most tangible things that are produced and Mr McGann says that when a firm sees its top line reduced by 18% and earnings per share down 88%, it is very disappointing. But he says that to put today's results into context, Smurfit Kappa's EBITDA margins are north of 12%, which are about twice the norm among its peers in the industry.
Mr McGann says today's announced planned price increase will not put it at a disadvantage to it competitors as everyone is operating at levels that are unsustainable. He adds that the price of paper are at an unsustainably low level and many competitors are below cash cost production. At the same time, input costs are rising.
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MORNING BRIEFS - The markets are wait to hear what the US Federal Reserve says tonight about prospects for recovery in the world's largest economy. This morning the Nikkei in Tokyo is 1.4% lower, and the Hang Seng in Hong Kong is 2% lower.
*** On the currency markets, the euro is trading at $1.4133 cents and 85.75 pence sterling.
