Payments to Smurfit Kappa Group shareholders have been suspended for 2009 following a reported financial loss in the fourth quarter of 2008. Results from the Group, which makes and recycles paper-based packaging, showed a net debt of €3.4 billion (£3.1bn).
But Group chief executive Gary McGann said: Against an increasingly difficult market backdrop, the Group is pleased to deliver a relatively strong financial outcome for 2008 in line with market expectations.
He also said the Group continued to have a very strong liquidity position of €281 million (£253.4m) in 2008, which is 50 percent higher than its 2007 position.
To maintain the companys position, the Group said it was increasing its cost cutting efforts and also announced a €100 million (£90.1) offer to buy back part of its senior bank debt.
McGann said: This step is being taken in response to indications that certain holders of the debt prefer liquidity at current debt trading levels, and the attractiveness of current debt trading levels to SKG.
This current financial position was achieved against weaker market conditions faced by the Groups recycled containerboard system, according to a Group statement.
Profit margins had been squeezed between lower materials prices and higher average operations costs. But SKG performance had benefitted from closures of high cost capacity over the past three years. Another measure praised for lessening the impact of economic conditions was downtime, which occurred across the industry.
The Group has continued to show its leadership with 95,000 tonnes of downtime taken in the fourth quarter, equivalent to 13 per cent of is capacity. For 2008 the Group has reduced its recycled containerboard output by about 230,000 tonnes (or 7.5 per cent capacity), the statement said.
New recycled container board capacity planned to become operational in 2009, could put additional pressure on prices, which may force some non-integrated or higher cost producers to close or idle more capacity.