Business

Powerflute, the Finnish containerboard manufacturer chaired by Dermot Smurfit, is continuing to evaluate "attractive acquisition candidates" after reporting "record production output and deliveries" in 2007.

The firm said its EBITDA for the 12 months to 31 December 2007, to be announced in March, would be around 60% higher than the £9m (€12.4m) achieved in 2006.

Smurfit said this figure would have been another £3m higher if the firm had not been left "seriously short of wood" by the warm winter in Russia in 2006/07, and therefore had to pay "ridiculous prices".

The weak dollar and uncertainty surrounding the introduction of a Russian export tax also had an impact.

"The EU is negotiating on behalf of Finland to have the tax rescinded, but it will certainly push up our costs. However, our stocks have been replenished and it's so far, so good this year," added Smurfit.

He was "hopeful" that Powerflute would make an acquisition before the first anniversary of the firm's flotation on the Alternative Investment Market (AIM) on 11 May.

Sales margins are expected to continue to improve in 2008 through price increases, efficiency improvements from the installation of a new paper machine headbox at the firm's Savon Sellu mill in Finland, cost reductions and further investment.

Smurfit said the investment was mainly designed to improve quality and the firm would launch its "strongest fluting so far" in June.

Powerflute is also seeking a listing on First North, the Finnish equivalent of the AIM, which should complement its existing trading facility and add "greater liquidity" and "depth of share distribution".

Powerflute's product is made primarily from birch wood sourced from Finland and Russia, and is used mainly to manufacture boxes for fresh and frozen produce.

Smurfit said this market was "reasonably recession-proof" and likely to benefit from the decision by retailers such as Marks & Spencer to sell fewer ready meals and more fresh produce.

Other applications include electrical goods, agricultural products and automotive products.