Paper packaging company Smurfit Kappa Group PLC (LON:SKG) posted a 9% decline in third quarter pre-tax profit but said it expects full year earnings to meet market forecasts.
Pre-tax profit fell to €170mln, reflecting a one-off €40mln hit resulting from costs pressures in the recovered fibre market. Recovered fibre refers to paper, paperboard, and fibrous materials from retail stores, office buildings and homes after they have passed through their end-use as a consumer item, or to material diverted from manufacturing waste.
SKG said it would continue to offset cost pressures thorough price recovery and efficiency improvements.
In reaction, shares rose 1.52% to 2,278p.
Revenue rose 4% year-on-year to €2.1bn while underlying earnings (EBITDA) dipped 1% to €320mln.
In Europe EBITDA rose 3% as margins improved on the back of price recovery and strong demand in most markets.
EBITDA in the Americas, however, fell 8% as a result of increased currency headwinds and input costs.
The EBITDA margin improved to 15.1% in third quarter from 13.9% in the second quarter but was lower than the 15.7% reported the same period a year ago.
Chief executive Tony Smurfit said: “The exceptional volatility in global recovered fibre trade flows continues to present some short-term uncertainty. The group has shown sequential progress within that context, and remains on track to continue corrugated price recovery.”
He said the group expects to deliver EBITDA in line with market expectations and will enter 2018 with “optimism and good momentum”.