December 2016: Tony Smurfit, CEO, Smurfit Kappa Group

Tony Smurfit (left) pictured here with Gary McGann

The arrival of Smurfit Kappa onto the FTSE 100 is a landmark moment for the Irish packaging giant and its CEO.

Smurfit Kappa’s corporate timeline is filled with historic moments: there the group’s evolution is chronicled from general box-makers Jefferson Smurfit in 1934 via its Irish Stock Exchange listing in 1964, the merger with Kappa Packaging in 2005, the close of the Gary McGann era in 2015 and the appointment of Tony Smurfit.

When the time comes for it to be updated, December 2016 will have provided yet another highlight in a remarkable story of growth for the firm and its CEO – as Smurfit Kappa Group entered the FTSE 100, the index of the highest-capitalised companies on the London Stock Exchange.

SKG finds itself in good company, with fellow Irish companies CRH, Shire, DCC and Paddy Power Betfair already well established on the Footsie. Reading-based medical company ConvaTec also made the step up, while building supplies firm Travis Perkins and metals producer Polymetal International were demoted.

Since then, the company has announced a €500m bond offering. “The group intends to use the proceeds from the offering to repay existing indebtedness, including using approximately €260m to reduce borrowings under the term loan facilities under the Senior Facilities Agreement and €220m to repay borrowings under the group’s existing securitisation facilities,” SKG announced. “Any remaining proceeds will be used for general corporate purposes.

“In addition, the group has obtained commitments to increase the revolving facility under its senior facilities agreement by up to €220m and intends to utilise the additional capacity from time to time for general corporate purposes, including refinancing existing indebtedness. These commitments are conditional on the completion of the notes offering.”

SIGNS OF GROWTH

Those weren’t the only signs of growth this winter. In Sweden, Smurfit Kappa announced a major investment to bring the first KBA hybrid offset printer and laminator to Europe.

A seven-colour technology, it can print UV and conventional colours in litho and display operations.

Meanwhile, the group’s UK operations acquired Norfolk-based firm Saxon Packaging, which converts board into corrugated boxes and fitments, as Smurfit Kappa UK CEO Clive Bowers explained.

“I am delighted with this acquisition, which will integrate another strong professional management team into the Smurfit Kappa organisation,” he said. “The culture of this company is very much aligned with the Smurfit Kappa philosophy, having built excellent businesses in selected customer and product sectors which will add to our existing strengths. These acquisitions support our continued drive to ‘open the future’ within the UK packaging market, further developing our customer offer, brand and reputation in a way that truly sets us apart.”

SKG continues to meet and exceed its ROCE target and has delivered improved EBITDA margins

The news followed SKG’s Q3 results, with revenue, EBITDA, EPS and ROCE all recording growth. “We are pleased to deliver good earnings growth for the quarter and the year to date,” explained CEO Tony Smurfit. “SKG continues to meet and exceed its ROCE target and has delivered improved EBITDA margins. This strong result reflects the high quality of our globally diversified operating platform, performance led culture, and the strength of our people and assets.

“In the third quarter, the group delivered a strong 6% increase in revenue on a constant currency basis. The reported EBITDA for the quarter increased 6% year-on-year to €323m. This performance was delivered against a backdrop of significantly higher than expected recovered fibre input costs and adverse currency movements.”