Smurfit Kappa upbeat on strong results despite Venezuela land grab plan

By Rory Harrington

- Last updated on GMT

Related tags: Cent, Venezuela

Smurfit Kappa Group (SKG) said a reorganization of its specialties segment would realize further efficiencies as it posted strong second quarter results. It also revealed that the Venezuelan Government had tabled proposals to seize thousands more hectares of its land.

The Ireland-based containerboard and corrugated packaging firm said healthy demand in Germany and Latin America, along with further efficiency measures and price increases were the main reasons for its 20 per cent leap in earnings to €264m to the end of June 2011.

It also said it had made an operating profit of €132m in the period despite shouldering costs totalling €35m relating to the shutdown of its Nanterre mill in France in June.

However, the company revealed that the Venezuelan Government planned to reclaim more than 7,000 hectares of its forestry land. A SKG spokesman said it was currently in negation with authorities from the South American regime but declined to make any further comment to FoodProductionDaily.com on the matter.

In 2009, the Hugo Chavez-led regime, reclaimed 1,500 hectare of land from the company.

Specialities overhaul

The firm announced today that from 1 September, 2011 its specialties business would be transferred into the existing European Packaging division.

Board mills will be integrated into the containerboard segment, while its converting operations will be merged with the relevant corrugated network in individual countries.

The move on the conversion side would create a ‘one-stop-shop’ , leading to a more innovative and efficient service, it said.

Packaging

Demand in Europe for its corrugated products was two per cent for the first half of the year – compared to four per cent in 2010 – with performance strongest in Germany, Spain and the Benelux countries.

Corrugated prices rose by two per cent compared to Q1.

The company suggested that it had navigated rising costs by raising prices. Rising costs for recycled fibre (31 per cent year-on-year), wood (16 per cent), starch (85 per cent) and energy (five per cent) – all provided a “strong platform for pricing”, ​it said.

The key driver for pricing over the next 12-18 months would be supply, said SKG, noting that only two new recycled containerboard machines are expected to come online in Europe by the end of 2013.

Latin America

Performance in Latin America, particularly in Venezuela and Argentine, saw earnings rise by 22 per cent in the first half of 2011 to €61m.

Volumes in Colombia rose six per cent year-on-year, while they inched up one per cent in Venezuela.

SKG said that the Chavez Government in Caracas had issued “precautionary measures”​ over 7,253 hectares of forestry land, with a view to claiming it and using it for food production.

Related topics: Processing & Packaging

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1 comment

Sincerity

Posted by Basil LONGY,

I hope that it is really for food production and not biofuel!

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