Paper packaging manufacturer, Smurfit Kappa has reported a €9m pre -tax loss for the six months to 30 June 2010. Revenues were 7% higher at €3,226m and the operating profit before exceptional items is shown at €206m compared with €170m for the previous year. In the second quarter, the Group says that its EBITDA margin improved to 13.0% in the second quarter, which primarily reflects the progress in its European packaging business performance, supported by increasing demand growth and further advances in corrugated price recovery.  The profitability of the Groups Specialties business also improved in the second quarter compared to the first quarter following the divestment of its sack converting business in May.

In Europe, the Groups corrugated volumes in quarter two were on average 5% higher than in the first quarter of 2010, and 8% higher than in the second quarter of 2009. Excluding the acquisition of the Mondi corrugated operations in the UK in May 2010, the Groups European corrugated volumes were 5% higher year-on-year in quarter two. In July, demand for the Groups corrugated products has remained firm. Gary McGann, Smurfit Kappa Group CEO, says:

"The Group is pleased to deliver an improved EBITDA margin of 13% in quarter two. Materially higher input costs were in part offset by the acceleration of corrugated price recovery in Europe and Latin America, together with the healthy pick-up in demand across all our key markets.

"Notwithstanding ongoing input cost pressure in the second half of 2010, SKG expects to continue to recover corrugated pricing and achieve its 2010 cost take-out target thereby delivering increased profitability.

"Consequently, subject to normal business risk, SKG now expects to deliver EBITDA growth in the region of 20% for the full year 2010, which together with strong cash flow generation in the second half of the year will lead to a meaningful reduction in its net debt to EBITDA ratio.



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