Spreadex | Feb 11, 2019 11:24
Until late summer, SKG had been having a wonder of a 2018. Initially starting the year at £24, the rejection of a takeover bid from International Paper (NYSE:IP) sent the stock rocketing higher in early March. It continued to (gradually) climb in the following months, culminating in August’s £33-plus record peak.
Cut to the end of the year and the company had lost all of that growth and then some, closing 2018 at £20.78. It has picked up momentum in 2019, but not a lot, with Smurfit Kappa Group (LON:SKG) at a current trading price of £21.66.
A decent Halloween update did little to stall Smurfit’s autumn/winter slide. For the first 9 months of its financial year underlying revenue was up 7%, with a 27% rise in group pre-exceptional EBITDA to €1.13 billion, and a 290 basis points improvement to its EBITDA margin to 16.9%. Having just completed the acquisition of Reparenco for €460 million, it also announced it would be buying a pair of ‘high quality integrated packing operations’ in Serbia for a total of €133 million.
Heading into Wednesday and the company will be hoping investors are a bit more receptive to its good news this time around. Analysts are expecting revenue to cross the €9 billion mark, compared to last year’s €8.6 billion, with a hefty 59.5% surge in pre-tax profit to €919 million. Given last October it announced it was shelving plans for a £50 million British plant due to Brexit fears, any comment on Britain’s EU-exit might end up being the headline coming out of the full year results.
Smurfit Kappa Group PLC(LON:SKG) has a consensus rating of ‘Hold’ alongside an average target price of £31.75.
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