A leading industry analyst has said that Smurfit Kappa's third quarter profit performance is a 'clear validation of its operational and financial resilience', as the packaging firm posted Q3 EBITDA of €390 million.
Commenting on the group's figures, Barry Dixon of Davy Stockbrokers, said, "That [Smurfit Kappa] can deliver all-time high margins in the teeth of a pandemic is impressive. That it is willing to reward shareholders and employees reflects the confidence in its financial position and the future.
"This is confirmed by its full year guidance, which seems typically prudent. The current valuation of the stock does not reflect this resilience or the improving dynamics in the industry."
Strong Performance
In the first nine months of the year, the company posted an EBITDA of €1,125 million and an EBITDA margin of 17.8%, as well as revenue of €6.31 billion.
The company said that its performance reflects its capital allocation decisions, its ability to manage its cost base, its geographic reach and the recovery in demand at both its European and American businesses.
“I am pleased to report that the quality of our business and the strength of our people has produced an excellent performance in both the third quarter and the year-to-date," commented Tony Smurfit, Smurfit Kappa CEO.
"While some uncertainty still exists around the evolution of the effects of COVID-19 in the weeks ahead, absent a dramatic change to working practices, the group expects to deliver EBITDA in the range of €1,460 million to €1,480 million for the full year 2020."
New Positioning
Smurfit Kappa said that its business today is strongly weighted towards FMCG customers, which has enabled it to enhance its growth from accelerating trends in e-commerce.
It said that it is 'developing a programme' to build on recently-introduced measures to improve operating efficiency and effectiveness across its operations.
“We are increasingly excited by our future prospects and the structural growth drivers of our business including e-commerce and sustainable packaging as well as our innovative ability to capitalise on these opportunities," Smurfit added.
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