In 2018 the Group reported its strongest ever result with EBITDA of €1,545 million, 25% ahead of 2017, with higher earnings in Europe and the Americas partly offset by higher Group centre costs and an EBITDA margin of 17.3%.

Revenue for the full year was €8,946 million, up 4% on the same period last year, or 7% on an underlying basis.

The European business delivered an underlying increase in revenue of 7% in 2018, driven by volume growth and continued input cost recovery. Together with the benefits of capital spend programme this delivered a full year EBITDA of €1,267 million, a year-on-year increase of 33%. EBITDA margin for the year was 18.3% compared to 14.9% in 2017.

Box volumes grew by 2% in the year with notable performances in France, Portugal, Russia, Scandinavia, Spain and Eastern Europe. The Group also prioritised input cost recovery during the year which impacted corrugated demand in certain countries. Input cost recovery in corrugated pricing continued into the second half of 2018 and was at the upper end of our expectations as we finished the year.

In 2018, the price of recovered fibre in European business was down 27% year-on-year, broadly returning to long term average price levels. The Group expects recovered fibre prices in the region to remain stable in the short term and to trend upwards in the longer term.

The European pricing for both testliner and kraftliner were relatively stable through 2018. With market increases for both grades in the first quarter, prices for recycled containerboard reduced in the fourth quarter ending the year flat with kraftliner up for the same period.

During 2018, the group completed a number of acquisitions. In July, the company acquired Reparenco in the Netherlands, securing the Group’s medium-term European recycled containerboard requirements through the acquisition of an independently owned mill system. In the fourth quarter, the Group announced its entry into Serbia with the acquisition of the FHB containerboard mill and the Avala Ada corrugated plant. This acquisition builds on our Greek acquisition in 2017, which is located in the North East of Greece and services the Balkan region. Finally, in the fourth quarter the Group completed the acquisitions of two corrugated plants and an erecting centre in France, further strengthening the Group’s market presence in the North West of the country. In the latter part of the year, the Group commenced a cost reduction programme across their operations.

Exceptional items charged within operating profit in 2018 amounted to €66 million. €28 million related to reorganisation and restructuring costs in Europe, €18 million related to the defence from the unsolicited approach by International Paper, €11 million to the loss on disposal of the Baden operations in Germany and €9 million was due to the UK High Court ruling on equalisation of guaranteed minimum pensions (‘GMP’) in the UK.

The Americas segment reported a year-on-year increase in EBITDA of 2% to €317 million. The EBITDA margin in the Americas continues to recover and increased to 15.7% from 14.4% in 2017. Underlying revenue growth for the year was 8%, driven by volume growth of 2% and price recovery initiatives following on from the significant containerboard price increases incurred through 2017 and 2018.

The Group has made significant progress on its Medium-Term Plan since its announcement in February 2018, together with continued expansion of its geographic reach, including acquisitions in France, the Netherlands and Serbia. These acquisitions are well positioned in their respective markets and offer great opportunities for future growth, adding three paper machines and four converting sites to the Group’s operational footprint.

The year also marked a significant shift in consumer awareness as to the benefits of renewable, recyclable and biodegradable paper-based packaging as against less environmentally friendly materials.

The current year has started positively, and together with the continued development of sustainable packaging, e-commerce and other demand drivers, SKG has an exciting future.

Among principal risks and uncertainties listed by Smurfit Kappa Group, are the economic climate to deteriorate, especially as a result of Brexit or changes in free trade agreements, and the cyclical nature of the packaging industry could result in overcapacity and consequently threaten the Group’s pricing structure.

During 2018, the Group was recognised with over 52 national or international awards for packaging innovation, sustainability, design and print. The awards stretched across 11 countries and two continents including Argentina, Colombia, the Czech Republic, France, Germany, Ireland, the Netherlands, Poland, Russia, Switzerland and the UK.

Smurfit Kappa, a FTSE 100 company, is one of the leading providers of paper-based packaging solutions in the world, with around 45,000 employees in over 350 production sites across 34 countries and with revenue of €8.9 billion in 2018. We are located in 22 countries in Europe, and 12 in the Americas. We are the only large-scale pan-regional player in Latin America.