Company to launch ‘Point of Purchase’ strategy in April

Smurfit Kappa reports 2% corrugated volume growth despite ‘volatile pricing environment’

By Jenny Eagle

- Last updated on GMT

Smurfit Kappa corrugated volume growth

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Smurfit Kappa Group (SKG) has seen 2% corrugated volume growth year-on-year in Europe despite a ‘volatile pricing environment for recycled containerboard’, as reported in its Fourth Quarter and Full Year Results 2014.

In other highlights, the company announced it will launch a ‘Point of Purchase’ strategy at its Innovation and Capital Markets Day in April; its refurbished recycled containerboard mill in Kent, UK, will start production in the first quarter of 2015 and its testliner mill in Viersen, Germany will close this year as part of a previously announced rationalisation programme. 

Venezuela drives uncertainty

Gary McGann, CEO, Smurfit Kappa told shareholders its business in the Americas performed well with volume growth and good margins in most countries but Venezuela drives uncertainty. 

The Group’s larger Latin American operations in Colombia and Mexico delivered strong earnings progression during the year and the growth of our US footprint has enhanced our exposure to the improving US market​,” he said. 

In Venezuela, economic volatility continues to drive currency uncertainty which impacted our business in 2014. However, to put our operations there into context, our 2014 Venezuelan earnings amounted to approximately 7% of Group EBITDA​.” 

The company has now updated its Principal Risks and Uncertainties disclosure in relation to Venezuela. 

As a whole, McGann said the Group outperformed its cost take-out target in 2014 with €117m in cost reduction initiatives during the year. It expects to further reduce its cost base by €75m. 

We are pleased to report higher returns and good earnings growth year-on-year in 2014, driven by new business wins, a continued focus on cost efficiencies, judicious capital investments and accretive acquisitions,​” he said. 

'Marketing on the shelf: exactly how in control are you?’

Progress against these measures has increased our ROCE to 15% and supports the Group's revised ROCE target of an average of 15% through the cycle​.” 

Following the launch of its ‘Open the Future’ initiative in June, SKG is working on the re-evaluation its customer expertise. It released a white paper in December 2014 entitled 'Marketing on the shelf: exactly how in control are you?’ and will launch a ‘Point of Purchase’ strategy at its Innovation and Capital Markets Day in April. 

“The Group’s refurbished 250,000 tonne recycled containerboard mill in Kent, UK, will commence production in the first quarter of 2015 with an estimated 2015 volume of 150,000 tonnes entering the market commencing in the second quarter​,” added McGann. 

SKG’s 80,000 tonne testliner mill in Viersen, Germany will cease production in the first quarter as part of a previously announced rationalisation programme. 

McGann said the Group remains committed to driving returns for its shareholders, and is increasing its ordinary dividend by 30%.

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