Smurfit Kappa Group plc (LON:SKG) shares moved higher on Wednesday as the company unveiled an interim dividend payment after withdrawing its final dividend for the prior year in April.
In its results for the six months ending June 30, 2020, the packaging maker reported underlying earnings (EBITDA) of €735mln, down 13% year-on-year, while revenues fell 9% to €4.2bn.
READ: Smurfit Kappa cancels dividend after revenues and profits fall in first quarter
In the results statement, the FTSE 100-listed firm's chief executive Tony Smurfit said he was “proud” of the results being delivered against the background of the coronavirus pandemic, which he said had created “an extremely challenging operating environment”.
“The strength and scale of our integrated system and our supply chain expertise meant we were able to ensure the continuity of supply of essential products for everyday life across multiple sectors”, the CEO said, noting that the company’s European business had performed strongly while its EBITDA margin in the Americas had risen to 19% from 17.1% in 2019.
While the company withdrew its final dividend for the previous year in April due to “macro uncertainty” created by the pandemic, Smurfit said it will pay an interim dividend of €0.809 per share, the same amount of the withdrawn final payout.
“This decision underscores the board’s belief in the inherent strengths of the SKG business, its balance sheet, free cash flow generation and its long-term prospects and our recognition of the importance of dividends to shareholders”, Smurfit said.
“Shareholders in Smurfit Kappa will be delighted at the return of their income stream, which reflects the relative resilience of the packaging business, helped by the rise and rise of online shopping and also management’s swift actions to manage costs, which resulted in a year-on-year increase in cash flow", said AJ Bell's Russ Mould.
He added that the return makes Smurfit the second FTSE 100 firm to return to the dividend payment list, following Land Securities Group PLC's (LON:LAND) decision to resume payments to investors in the autumn.
The news sent Smurfit's shares up 5.5% to 2,618p in mid-morning deals on Wednesday.
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