Smurfit Kappa Group plc (LON:SKG) has cancelled the payment of its final dividend for last year despite all the packaging group’s facilities remaining operational through the coronavirus crisis.
While volumes increased 2% in Europe and in the Americas were up 3.5%, the biggest corrugated packaging producer in Western Europe reported first-quarter revenue down 5% year-on-year to €2.2bn.
Underlying profit of €380mln was down 10% as margin fell to 17.3% from the 18.2% seen for 2019 as a whole.
At the end of the first quarter of 2020, the Ireland-headquartered group reported liquidity of more than €1.5bn, with no bond maturity until 2024 and capital expenditure for 2020 being cut from previous guidance of €615mln to below €550mln.
Chief executive Tony Smurfit said all of its 350-plus facilities were operational in the quarter to enable food producers, pharmaceutical firms and other customers to deliver essential supplies, though he acknowledged “the full extent and effects of the macro and economic risks brought on by Covid-19 are unclear”.
As such, it was felt prudent to withdraw the recommendation for the final dividend of €0.809 per share, which had been increased by 12% in February’s results.
SKG's shares were up and down on Wednesday but flat at 2,259.61p by mid-morning, down 23% in the year to date.