May 10, 2013. /Lesprom Network/. Smurfit Kappa Group’s 1Q EBITDA of Euro 241 million has been achieved against the backdrop of the predicted margin squeeze and one-off costs such as the maintenance closures of the Nettingsdorfer kraftliner mill in Europe and the Cali mill site in Colombia, both of which normally occur in other quarters of the year, as the company said in a press release received by Lesprom Network.

At Euro 1,889 million, sales revenue was Euro 66 million higher year-on-year in the 1Q 2013 representing a 4% increase over the same period in 2012.

However, underlying sales were broadly flat when adjusting for a positive Euro 104 million from acquisitions and negative currency movements and hyperinflationary adjustments of Euro 32 million. Compared to the fourth quarter of 2012, sales revenue was Euro 65 million higher in the 1Q 2013.

The Group’s net debt increased by Euro 79 million to Euro 2,871 million during the 1Q, reflecting negative free cash flow of Euro 23 million, a Euro 15 million outflow in respect of the purchase of own shares for the Group’s Deferred Annual Bonus Plan and a Euro 31 million negative currency movement on net debt mainly as a result of the Venezuelan devaluation in February 2013.

The Group’s net debt to EBITDA ratio of 2.8x at the end of March 2013 remains comfortably below its committed upper threshold of 3.0x throughout the cycle.

Gary McGann, Smurfit Kappa Group CEO, commented: “The Group is pleased to report year-on-year revenue growth of 4% in the first quarter. Despite a number of one-off costs, EBITDA for the 1Q remained strong at Euro 241 million. Smurfit Kappa Group’s performance reflects the previously guided margin compression in Europe following OCC and recycled paper price increases which are not yet reflected in corrugated pricing. A Euro 40 per tonne recycled paper price increase in Europe during the quarter supports corrugated pricing.

Input costs including OCC continue to move upwards. Paper price increases and a good inventory position across Europe are creating an environment for corrugated price recovery in the second half of 2013.

The performance of SKOC and the progress of its integration into the Group has exceeded our original expectations. We have doubled our synergy expectations from $14 million to $28 million. Over $9 million of this synergy target will be delivered in 2013 compared to $6 million in the original pro-forma calculation. Additionally, the trading performance of the business has been significantly helped by the implementation of two paper price increases in the United States within an eight month period, with consequent increases in corrugated prices in the US and Mexican markets.

The overall performance of the Americas segment has resulted in the region returning towards its historic EBITDA margin range. Our objective is to increase our exposure to higher growth markets such as the Americas. In the period the region delivered over 27% of Group EBITDA.”

Smurfit Kappa Group is a world leader in paper-based packaging with operations in Europe and the Americas. SKG operates in 21 countries in Europe and 11 in the Americas. Smurfit Kappa Group is the European leader in paper-based packaging including, corrugated, containerboard, bag-in-box, solidboard, and solidboard packaging. It also has a key position in a number of other product/market segments, including graphicboard, MG paper and sack paper.