Smurfit Kappa Full Year 2020 ResultsFebruary 10, 2021
“Smurfit Kappa is pleased to report an EBITDA of €1,510 million for the year 2020, ahead of our stated guidance. Both Europe and the Americas had strong demand in the fourth quarter offsetting significantly higher input costs, predominantly in recovered fibre. In what has been the most challenging year in recent memory I would like to acknowledge the tremendous efforts by all our 46,000 employees, and thank our over 65,000 customers for their continued support.
“Over a number of years SKG has transformed its business through disciplined capital allocation and a focus on innovation, further demonstrated today by our strong performance with an EBITDA of €1,510 million, an EBITDA margin of 17.7%, record free cash flow of €675 million and a ROCE of 14.6%.
“In November, we successfully completed a share placing to capitalise on structural drivers of growth; to invest in sustainability; and to increase our operating efficiencies. SKG is now increasingly well positioned to take advantage of these opportunities, from a position of enhanced financial strength.
“Our European business delivered a very strong performance with an EBITDA of €1,180 million and EBITDA margin of 17.8%. Demand accelerated in the second half, with a particularly strong fourth quarter driven by increased demand across our customer base.
“I am equally pleased with the performance in our Americas region which delivered an EBITDA of €372 million and a record EBITDA margin of 19.7%. This performance is as a result of our very strong market positions, our successful acquisitions and the high-return investments made in the region in recent years.
“SKG recognises the importance of dividends to shareholders and we were pleased to meet all our dividend commitments during 2020. In addition, we have repaid all specific government support schemes related to the pandemic. As noted in our third quarter trading update we initiated a programme during the fourth quarter to further increase our operating efficiency and effectiveness through new ways of working. We have taken an exceptional charge of €35 million in relation to this and expect to realise the benefits within two years.
“In recognition of our employees’ response to the pandemic, SKG made a unique reward in the fourth quarter to every employee. Furthermore, across our 35 countries, the Group has made donations to charities, research and medical institutions and frontline health professionals, in addition to our well established community engagement programmes.
“Our product, paper-based packaging, is renewable, recyclable and biodegradable and plays a fundamental part in addressing our customers’ sustainability challenges. In SKG, we produce our products in an ever more sustainable manner and we have, again, reset our targets in this area. We believe that all industries must do their part in contributing to a better world and we remain committed to using the best available technology to both help us reduce our impact on the planet and to help our customers meet their ambitions.
“Driven by strong secular trends such as e-commerce and sustainability, the outlook for our industry is increasingly positive. SKG has positioned itself as the leading company within the industry, with great people, providing our customers with unique packaging solutions centred around innovation, efficiency and sustainability. The inherent strength of our business together with the recent capital raise provides us with an unrivalled platform to accelerate our vision and the Group’s next phase of growth and development.
“While there remains some uncertainty on the impact and duration of COVID-19, the year has started well with the continuation of the demand trends seen during the last quarter. Reflecting the Board’s confidence in this performance and prospects for the business looking forward, the Board is proposing an increase in the final dividend of 8% to 87.4 cent per share.”