Smurfit Kappa to pay second dividend as profits fall less than expected

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Smurfit Kappa Group plc (LON:SKG) said it will pay a second interim dividend, a year-end bonus to staff and repay any government coronavirus support after achieving a stronger than expected third quarter.

The paper-based packaging group, which says all its products are 100% renewable and produced sustainably, declared a second interim dividend of 27.9 euro cents per share, which would mean it was aligned with the payment cycles of previous years.

In the three months since the end of June, the FTSE 100 group made an underlying profit (EBITDA) of €390mln, down 5% from the €410mln this time last year.

For the nine months of 2020 so far, this equated to EBITDA of €1.13bn from revenue of €6.31bn, down 10% from €1.26bn and 8% from €6.85bn respectively a year ago.

The improvement in the third quarter reflected the recovery in demand in both its European and Americas businesses, geographic spread and management of the cost base, the Dublin-based group said.

Chief executive Tony Smurfit said: “While some uncertainty still exists around the evolution of the effects of COVID-19 in the weeks ahead, absent a dramatic change to working practices, the group expects to deliver EBITDA in the range of €1,460mln to €1,480mln for the full year 2020.”

Smufit said the group is strongly weighted towards FMCG customers and is “well positioned to enhance our growth from the accelerating trends in e-commerce, innovative packaging and increased consumer demand for sustainable packaging”, while the pandemic has led to new ways of working that it will use to increase efficiency on an ongoing basis.

The shares rose 3% to 3,188p on Wednesday morning.

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