Tony Smurfit, chief executive of Smurfit Kappa, has said that a potential share buyback at the company won’t be happening any time soon.
Speaking to the Irish Independent, Smurfit confirmed that any such scheme is at least“a couple of years down the road”.
This is despite a positive year of growth, which saw the international packaging giant achieve revenue growth of 4% in 2018 to €8.9 billion.
The group also reported an EBITDA of €1.5 billion for the full year, a 25% increase on 2017. Its EBITDA margin was 17.3%.
“We've got dividends, good acquisitions which we've done, investments in our business and balance sheet strength. If your balance sheet is over-strong and you're able to do all those other three things, then, of course, buybacks are always possible," Smurfit told the Irish Independent.
“We're not there yet. We have plenty of opportunities to invest in our business, plenty of opportunity on the dividend, and plenty of opportunity on acquisitions, so that's a couple of years down the road I would think,” he said.
Cash Transactions
Smurfit added that the group wished to focus on its recent form of merger and acquisition activity. He also confirmed that the group would continue to use cash to fund these acquisitions.
"You would normally prefer to use cash," he said. "Obviously, the bigger it is and the more substantial the acquisition, the idea of using shares would come in. We spent a lot of time getting our balance sheet into a shape that is rock-solid. Today, our balance sheet is in remarkably good shape… for a large acquisition, we'd just take advice on what's the best way to finance it," Smurfit added.
"Sometimes when you're doing large acquisitions, the other side might want your shares. We're an undervalued share, so when that changes I don't know, but it will change at some future point and people will see a double appreciation - they sell their business to us and then they get share appreciation," he explained.
Smurfit Kappa recently reported a strong start to 2019, recording revenue growth of 7% year-on-year to €2.3 billion.
© 2019 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click sign-up to subscribe to Checkout.
