Smurfit Kappa Share Discussion Threads

[lbo] 13/11/2009 11:08

Smurfit Kappa yesterday announced it had completed the pricing of an offering of c.€1.0bn senior secured notes. As previously outlined the net proceeds will be used to repay a portion of its 3 outstanding term loans under the Group's senior facility agreement. The details of the offering are - €500m of 7.25% notes due in 2017 (8 years) and €500m of 7.75% notes due in 2019 (10 years). The notes will yield 7.5% and 7.875% respectively.
• The offering of c.€1.0bn in senior secured notes is double the expected offering (€500m) that the Group had launched earlier in the week with its Q3 results and would indicate that market appetite was significant. Smurfit Kappa's ability to raise c.€1.0bn in bonds to extend its bank debt maturities was put in place in June when it secured bank amendments to improve its financial flexibility.

[keelingr] 12/11/2009 13:56

From Merrion-Capital

Smurfit Kappa (Buy @ €6.20)
Improved mid-cycle EBITDA potential – Upgrading to Buy
Thu, 12 Nov 2009
SKG's mid-cycle earnings capacity is greater than we previously estimated. While the erosion of supply discipline is a key risk, we now believe SKG can reach mid-cycle EBITDA earlier than we had anticipated due to the impressive pace of recent supply-driven price increases. Consequently, an EV valuation of 6x mid-cycle EBITDA is now appropriate, equivalent to €8.25 per share. We upgrade to BUY.
Better than expected trough EBITDA increases earnings capacity to a recovery in prices
As a result of SKG's better than expected Q3 results its trough earnings run rate will be greater than we previously estimated. Despite sequentially weaker corrugated box prices and firmer recycled fibre costs, Q3 EBITDA rose to €192m from €184m in Q2 rather than decline as forecasted, as cost savings and a strong performance in the Latin American operations provided a greater than anticipated offset.

Significant EBITDA forecast upgrades
We are upgrading our 2009 EBITDA forecasts to €730m (from €674m) to reflect the €32m positive variance in Q3 and an increase in our Q4 forecast to €175m. For 2010, we are revising our EBITDA forecast to €830m from €680m. With demand having now stabilised, our upgrade assumes that the Q4 €50 per tonne containerboard price increase will be successfully passed through to corrugated box prices, giving a €70m uplift. This is in addition to the €80m positive impact from the higher than expected trough quarterly EBITDA run-rate. The timing of a demand-led containerboard price increase is uncertain. Our forecasts assume a €50 per tonne increase (feeding into a c.5% box price increase) at end 2010, allowing a further increase in EBITDA in 2011 to €940m, partly offset by higher input costs. Supply discipline is a key risk, resulting in a degree of uncertainty in forecasts beyond H1 2010. Our revised EBITDA forecasts underpin free cash flow estimates of c.€250m in both 2010 and 2011.

EV valuation of 6.0x mid-cycle EBITDA now appropriate – Upgrading to BUY
Our estimate of SKG's mid-cycle EBITDA capacity has increased to €900m from €850m. Furthermore, industry supply actions have resulted in the implementation of price increases quicker than we anticipated. This will allow SKG attain mid-cycle earnings earlier than we previously expected - within the next two years, or possibly sooner depending on the timing of a demand pick up. In this context, it is our view that an EV valuation rating of 6.0x is now appropriate, equivalent to a share price of €8.25. In addition, the conversion of debt paydown into equity value has the potential to add c.€1 per share p.a. We upgrade our recommendation from Hold to BUY.

[lbo] 11/11/2009 08:15

Smurfit sees revenues, profits fall

[keelingr] 11/11/2009 08:05

Price 594c Rating: Outperform Issued: 30/06/09
Smurfit Kappa Group (SKG) reported very strong Q3 results with EBITDA of
€192m, well ahead of our forecast (€164m) and consensus (€172m). The outlook
for the sector remains positive with box volumes having stabilised. We will likely
upgrade our full year 2009 and 2010 forecasts.
Q3 EBITDA of €192m was up 4% on the Q2 outcome. Margins increased by 40bps
to 12.7% due to better cost management, while management confirmed that
price increases for containerboard at €80/tonne have been successfully
implemented. According to RISI, a further €20/tonne could be implemented before
year-end.
Corrugated volumes appear to have stabilised in the quarter. However,
management remains sanguine – indicating that a return to demand for
corrugated products has yet to materialise. Prices are likely to increase in Q1, which
will be a further positive for SKG's margins.
Free cash flow in the quarter was €125m and reduced the debt burden to just over
€3bn, implying a net debt/LTM EBITDA of 4.0 times – ahead of our 4.3 times
forecast.
SKG's cost-efficiency programme continues and will likely have an ongoing positive
impact on margins. The company has increased its cost take-out target for 2009 by
€10m to €140m.
In light of these strong results and positive outlook, we will likely increase our 2009
and 2010 forecasts by circa 5%. We reiterate our 'outperform' rating and 1000c
price target for the stock.
A conference call will take place at 14.00 GMT (09:00 ET). Telephone: +353 1
4860914 (Ireland), [phone] (Europe), [phone] (US).

[keelingr] 11/11/2009 07:32

Strong set of results today, €130 reduction in net debt and €500m bond offering extending maturity profile will be welcomed by the market - should see a decent jump

[lbo] 10/11/2009 10:47

Smurfit Kappa in 8-year debt debt issue


Packaging giant, Smurfit Kappa, today said that one of its wholly-owned subsidiaries plans to issue debt in the form of senior secured notes due 2017.

The net proceeds of the new notes will be used to repay a portion of the outstanding indebtedness under its senior credit facility, it said.

According to Goodbody Stockbrokers' Robert Eason: Goodbody analyst Robert Eason comments: "The only detail given is that it will be 8-year money, which will help to pay down bank debt and extend the maturity profile of its debt. Smurfit Kappa's revised its banking arrangements back in June, part of which included the ability to raise up to E1bn in the bond markets. At the end of June Smurfit Kappa had net debt of just under E3.2bn."

[lbo] 03/11/2009 10:48

Amazing recovery by Smurfit looks a bit premature

[lbo] 01/10/2009 16:15

Smurfit Kappa to close mill in Slovakia

[mattjos] 09/9/2009 13:27

From Board Converting News this month:

Mainland EU corrugated casemaking raw materil (CCM) mills announced price increases of €60-100 per tonne as of early Sept. Despite the recession, UK CCM mills will alos be implementing increases (£35-40/tonne) for all brown & white grades during Sept.
Majnland mille execs explain that folowing a reduciton in capacity of some 8% in firsgt half 2009, sotck levels in EU have reduced. Few, if any, EU mills were making a profit in the first half, hence price increases.CCM capacity has reduced a net 275,000tpa in the UK this year, 18% yoy reduction yet demand is only likely to be down 7-8% during the year ..not suprising then that UK produced recycled CCM grades (brwon & White) are being increased.

I wach the trades here occasionally .... mainly AT Buy trades for the last few weeks so am expecting a holdings RNS at some point, otherwise happy to hold and expect to see another 35% gain over the next 3-4 months ..... probably not big enough for some folk as other stocks seem to be bouncing around that % per day at present but this doesn't require much worry or thought right now.

[lbo] 24/8/2009 21:44

The risk of a double-dip recession is rising

[lbo] 12/8/2009 21:20

FT Comment

Smurfit Kappa's attempt to drive through price increases of €60 a tonne on containerboard prices – compared with prevailing rates of about €240 – are unlikely to impact significantly on current-year earnings expectations. However, capacity reductions by the market leader and its peers offer some prospect of countering the sharp falls in revenue being endured in the distressed sector. With its market capitalisation dwarfed by its debt, it remains a risky stock

[lbo] 12/8/2009 21:14

Revenue for the quarter was €1.498bn compared to consensus of €1.535bn

Recovery in demand is the key issue for Smurfit as continued
cost cuts will only off-set falls in demand to a certain point. Another issue for the group is the decline in capex spending. It is currently running at 62% of the depreciation charge and at some point it will have to be increased to maintain efficiency in production. This will put free cash flow under pressure if demand hasn't pick up at that stage.



Smurfit Kappa warns on recovery as profits tumble by 46pc

[lbo] 10/8/2009 22:40

Smurfit plans the perfect birthday package as he swaps Monaco for Dublin Horse Show to celebrate




Brokers manipulating markets by stealth, says Financial Regulator



Some Dublin stockbrokers are potentially engaging in market manipulation by seeking to place largescale orders for stocks which are then not implemented, the Financial Regulator has concluded after a long investigation

[weemonkey] 08/8/2009 11:43

this company is capitalised at not much more than the cash on the books

[lbo] 24/7/2009 11:09

Smurfit Kappa - SCA Q2 results highlight weak demand and pricing pressure in packaging


• SCA yesterday reported Q2 results which show continued weak demand and price pressure for both corrugated board and testliner. While inventories were reported to have declined significantly, SCA states that further measures are required to correct the current imbalance between supply and demand. SCA removed 158k tonnes of capacity from its system during the quarter.
• Demand for corrugated board declined by 12% compared with the same period last year, with large markets such as Germany and Italy particularly impacted. Quarter on quarter, the reduction is less stark at -1%. Pricing of both kraftliner and testliner fell further during the quarter which has put downward pressure on corrugated board prices which were 4% lower than in Q1.
• Both SCA and Stora Enso's results yesterday points to continued challenging market conditions in the European packaging market ahead of Smurfit Kappa's Q2 results on 12 August.

[lbo] 01/7/2009 10:56

Fears for 170 jobs at Smurfit Kappa Cork







Smurfit Kappa to cut 140 Cork jobs

[lbo] 30/6/2009 23:59

The world's forest, paper and packaging industry dropped by $8 billion in 2008


The global forest, paper and packaging industry suffered an $8 billion (£4.89bn) drop in net income in 2008, according to a survey carried out by PricewaterhouseCoopers.

PwC's Industry Survey places SCA Packaging as the top European firm in the industry with a 2008 net income of $857 million. Irish firm Smurfit Kappa came fourth with a net income loss of $73m and the Mondi Group came sixth, losing $310m.

DS Smith – which has recently reported an 85 per cent pre-tax loss – came ninth, although data was based on its 2007/08 financial results.

The report blamed the financial drops on cuts in production and capacity nearly across the board. It said: "The main producers have sought to retain discipline on the supply side with aggressive curtailments or closures of capacity, with indications that they will remain on this strategy in 2009. While these actions are aimed at retaining the industry on a more stable footing, once demand recovers, they are a drag on operating profits."

However, for those working with wood products it said 2008 industry suffered because falling construction demand led to a fall in prices.

An uncertain future is predicted for the European industry with continued weakness in 2009




It is hoped by issuing senior secured bonds, extending the maturity of the Group's Revolving Credit Facility and increasing the existing headroom under leverage and interest cover covenants for the next three years, it will significantly enhance its finance flexibility.The value of senior secured bonds to go on the market will be decided by the firm's lenders. Through the bonds, SKG believe they will be able repay senior bank debt when the market conditions improve.

[lbo] 25/6/2009 13:07

Smurfit Kappa - DS Smith see margins being impacted and demand falling sharply
• UK paper group DS Smith released FY results showing group revenues up 7.1% inline with estimates but PBT down 84.6% to £16.8 behind estimates of £43m.

[lbo] 22/6/2009 19:20

Weighed down by paper mountain



These are tough times for European packaging companies, with many finding themselves saddled with high debt levels, price competition and falling demand that has created overcapacity in many markets.

The vulnerability of packaging companies to the downturn has been reflected by the likes of Smurfit Kappa, the private equity-backed cardboard and paper maker that relisted on 2007, and which earlier this month announced plans to restructure its €3.2bn (£2.7bn) debt to create more financial headroom to ride out the downturn.

Smurfit Kappa is seeking to push out the maturity of borrowing facilities as it continues aggressively to pay down debt. But, along with many of its European peers seeking to protect margins, it is involved in a game of "chicken" over who is prepared to shut down plants as demand for corrugated cardboard and other paper-based packaging sags

[lbo] 15/6/2009 20:58

Smurfit Kappa facing land seizure in Venezuela


Land owned by packaging group Smurfit Kappa in Venezuela is to come under additional scrutiny from the leftist Government as bureaucrats continue to bring more corporate assets under state control.

Problems in real economy dwarf those of bank sector






Moody's believes 19.2 per cent of European junk-rated borrowers will default by the fourth quarter, more than the global default rate, which is forecast to peak at 14.8 per cent.

While investment-grade companies have been able to sell bonds to refinance debt or acquisitions easily this year, European junk bond markets have been all but closed for a year

Corporate Ireland tries to escape wall of debt

[lbo] 10/6/2009 21:20

The company's bank covenants currently stand at 4.7X and with a current net debt/ebitda ratio of 3.7X any further deterioration in revenues would put the company in an uncomfortable financial position.