Smurfit Kappa : Q3 2015 Results

• Year to date Group corrugated volume growth of 6% year-on-year with 3% organic growth in Europe

• Sequential EBITDA increase of 7% with EBITDA margins improving to 15% in the third quarter

• Pre-exceptional Basic EPS growth of 20% year to date

• Increased Return on Capital Employed of 15%, in line with our target

• Strong free cash flows reducing net debt and strengthening the Group's strategic flexibility

• Based on current operating conditions, 2015 EBITDA is expected to be in line with market expectations

Tony Smurfit, Smurfit Kappa Group CEO, commented: 'We are pleased to report sequential EBITDA growth of 7% and an improvement in EBITDA margins to 15% in the third quarter of 2015. This performance reflects improved demand throughout the year alongside the continued development of our business through effective investment in our asset base, ongoing integration of acquisitions and consistent delivery against cost efficiency objectives. Although the reported EBITDA of €855 million in the year to date has been significantly impacted by the adoption of the variable Sistema Marginal de Divisas ('Simadi') rate for the consolidation of our Venezuelan operations, our business when excluding Venezuela is performing well and delivered EBITDA growth of 5% year-on-year. Our constant focus on cost reduction and disciplined capital investment will continue to support our target metric of an average ROCE of 15% through the cycle.

'The Group's corrugated packaging volumes grew by over 6% in the year to date and over 5% in the quarter as a result of acquisitions in both Europe and the Americas combined with good organic growth. There was some evidence of a slower rate of growth in Europe in the third quarter when compared to the second quarter. However, organic growth remains at a solid level, supported by our drive to enhance the value proposition delivered to our customers. Overall demand levels remain good, and as a consequence the European containerboard market remains well balanced. The industry's solid fundamental outlook and the containerboard price increases implemented in July will support our current focus on driving corrugated price recovery.

'In the Americas, our business has operated well with margins improving through the year despite currency headwinds. Over 80% of our business in the region is across the three more developed markets of the US, Mexico and Colombia. We will continue to invest in this region where we can identify earnings value enhancing opportunities, as evidenced by our recent acquisition of Sound Packaging in the US in October 2015.

'The Group's capacity to deliver strong free cash flows expands our range of strategic and financial options. Our capital investment projects are progressing well across all our operating units and our UK mill re-build is now on track. We will continue to deploy capital to grow the business through internal investment and acquisitions where we can exceed our ROCE target of 15%, and to focus on driving higher capital returns for our shareholders.

'Based on current operating conditions, the Group expects to deliver a full year EBITDA result in line with market expectations. This result reflects the resilience of Smurfit Kappa's integrated and geographically diversified business model, and the good underlying level of growth in the business.'

SKG - Q3 2015 Press Release.pdf

SKG - Q3 2015 Press Presentation.pdf