Smur­fit to de­mand com­pen­sa­tion from Venezuela for plant seizure

Irish Independent - Business Week - - FRONT PAGE - Gavin McLough­lin

CARD­BOARD box maker Smur­fit Kappa will seek com­pen­sa­tion from Venezuela for the seizure of its op­er­a­tions in that coun­try.

The seizure meant Smur­fit had to write down its net as­sets by €66m.

CEO Tony Smur­fit told an­a­lysts yes­ter­day that he was “deeply, deeply sad­dened for all of the em­ploy­ees and their fam­i­lies who have ben­e­fited from se­cure and gain­ful em­ploy­ment dur­ing our al­most 65 years of op­er­a­tions in that coun­try”.

“The ac­tions taken by the gov­ern­ment are with­out prece­dent for the [com­pany] and Smur­fit Kappa will dili­gently pur­sue its in­ter­na­tional rights in this re­gard, in­clud­ing the right to claim com­pen­sa­tion through in­ter­na­tional ar­bi­tra­tion pro­ceed­ings un­der the ap­pli­ca­ble Bi­lat­eral In­vest­ment Treaty.”

The com­pany re­leased a trad­ing up­date yes­ter­day cov­er­ing the first nine months of its fi­nan­cial year.

It said un­der­ly­ing rev­enue was up 7pc year-on-year while ebitda (earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion) be­fore ex­cep­tional items was up 27pc year-on-year.

Chair­man Liam O’Ma­hony, the for­mer CRH CEO who has been in the role for 10 years, is to be re­placed as chair­man by Irial Fi­nan next year, the com­pany said.

Smur­fit also an­nounced an agree­ment to buy a Ser­bian plant and pa­per mill for a com­bined €133m, say­ing this would in­crease the com­pany’s Euro­pean foot­print and see it en­ter­ing “a new, well-con­sol­i­dated and grow­ing mar­ket”.

“We are very happy with the per­for-

Euro­pean tar­get:

Smur­fit CEO Tony Smur­fit said the com­pany will ex­pand its foot­print with ac­qui­si­tions in Ser­bia and noted that un­cer­tainty in Italy had hit busi­ness there mance to date,” Mr Smur­fit said, adding that de­mand growth was con­tin­u­ing along­side re­cov­ery in cor­ru­gated prices.

He said 2018 would be “ma­te­ri­ally bet­ter” than 2017 for the com­pany.

He said, how­ever, that Europe had been “a lit­tle bit slower” in the third quar­ter.

“I think the two re­gions that we felt some­thing more than nor­mal were within Italy and the UK. And you ob­vi­ously can fig­ure out the rea­sons. In Italy, there’s been a lot of un­cer­tainty, and of course, there’s the Brexit is­sue.”

He added: “The heat of the sum­mer cer­tainly was pos­i­tive for cer­tain as­pects of the busi­ness, like brew­ing and things like that.

“But on a large sec­tor of the area that we cov­ered like agri, we would see that that has been much weaker than we would have ex­pected be­cause the weather has been ef­fec­tively hurt­ing a lot of the crops, and so that has been an is­sue.”

In the Amer­i­cas, the com­pany said it had seen “con­tin­ued vol­ume growth with fur­ther mar­gin ex­pan­sion on a year-on-year ba­sis.”

But hy­per­in­fla­tion in Ar­gentina (where in­fla­tion is at 40pc) had neg­a­tive ef­fects, Mr Smur­fit said.

“Our key coun­tries of Colom­bia, Mex­ico, and the US, which rep­re­sent over 80pc of the re­gion for us, con­tinue to de­liver solid results.

Else­where, Brazil con­tin­ues to per­form strongly with Ar­gentina neg­a­tively im­pact­ing ebitda by ap­prox­i­mately €5m.

Shares in the busi­ness were up more than 1.5pc in af­ter­noon trad­ing in Dublin, hav­ing pared some of the gains seen ear­lier in the day.

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