In the corrugated giant's first half of the year statement published today (31 July), chief executive Gary McGann said the growth was the result of improved pricing, continued cost take-out and enhanced efficiency programmes.
Revenue for the half year grew from €3.6bn in 2012 to €3.9bn.? However, pre-tax profit decreased from €184m in 2012 to €127m in 2013.
Volume growth in its European market rose by more than 2% year on year, with growth in the Americas region, excluding Smurfit Kappa Orange County (SKOC), at 5%.
The group has reported a further €26m in cost take-out during the second quarter of 2013, bringing total cost savings for the year to date to €46m. The €100m objective for 2013 is fully expected to be realised and will bring cumulative cost savings to €600m since the first such programme was initiated in 2007.
Smurfit Kappa said that its EBITDA for the first half of the year also reflected higher earnings in the Americas.
Price increase
Elsewhere, the group announced recycled containerboard price increases of €50 per tonne. Smurfit Kappa said rising input costs and improving circumstances in the European paper industry including, low inventory levels, solid export markets and relatively high operating rates support higher recycled containerboard prices.
The group said that this move will help it move towards economically sustainable recycled paper pricing and it will recover the increased costs in its corrugated pricing with the usual three to six month lag.
Townsend Hook paper mill investment
Smurfit Kappa also provided an update on its €114m Townsend Hook paper mill development in Kent. The group said that its 250,000 tonne recycled containerboard mill was temporarily closed at the end of June and is scheduled to re-start in the fourth quarter of 2014 with a 250,000 lightweight machine.
In a statement, it said: "This is the largest in a series of such projects being undertaken by SKG throughout the European paper system, all of which are delivering increased productivity, lower costs and ensuring the Group is suitably positioned to respond to increasing demand for lighter weight containerboard in its end packaging market."
Nechells update
Earlier this year, Smurfit Kappa's paper mill in Nechells, Birmingham, was forced to temporarily cease production as a result of a fire in its recovered fibre stock yard. ?The group said that no injuries were sustained during the incident and due to the speedy deployment of a protective water curtain, the mill was unaffected restarting operations within 42 hours of the shut. Approximately 9,000 tonnes of recovered paper was destroyed and total costs associated with the incident are expected to be €3m.
Packaging growth
McGann said: "SKG's ability to win new business in the current challenging operating environment is evidence of the Group's strong value proposition for our customers. With an integrated global network of packaging designers, trademarked software tools and technical engineers, SKG is well placed to deliver a superior total offering together with real cost efficiencies throughout its customers' supply chains. In July the Group announced the development of a unique 3D tool entitled 'Virtual Store' to enhance the understanding of shopper behaviour. This will translate into real benefits for retail ready packaging design."
