* Containerboard prices to increase from Sept. 1
* Q2 core profit down 29 percent, but beats expectations
* Sees stable H2 demand, no tangible signs of recovery
* Shares up 5 percent
(Adds CFO, analyst quotes, share price)
By Padraic Halpin
DUBLIN, Aug 12 (Reuters) - Irish packaging group Smurfit Kappa posted forecast-beating quarterly results and said it planned to raise prices in response to higher raw material costs, sending its shares 5 percent higher on Wednesday.
Smurfit, Europe's leading producer of containerboard with a quarter of the market, is the first major supplier to increase prices in response to higher input costs. It plans to raise them by around 25 percent, or 60 euros per tonne, from Sept. 1
"It will be interesting to see in the next week or so if any of the other big players come out and support this move with price increases but I think they will," Barry Dixon, analyst with Davy Stockbrokers said.
"In a lot of ways they will determine the direction of pricing but they will need the support of the other big players like SCA, Mondi or DS Smith to push through those price increases."
Smurfit Kappa said materially reduced containerboard inventories supported the decision, which would have limited impact on profitability in 2009 but should influence the bottom line in early 2010.
The company's smaller-than-expected fall in second-quarter core profit, which contributed to a 5 percent jump in the share price, outperforming a 0.32 percent increase in the general index.
Shares in rival paper makers Sweden's SCA and South Africa's Mondi were up 0.25 and 0.79 percent, respectively, while British packaging and office products firm DS Smith traded 0.25 percent lower.
GUIDANCE IMPOSSIBLE
Smurfit Kappa, which has won lender approval to refinance some of its debt and is preparing the ground for a 1 billion euro bond issue, said global economic uncertainty made earnings guidance for the full year difficult.
"At this moment in time it's impossible to give guidance because nobody knows what volumes are going to be for the second half of the year," Chief Financial Officer Ian Curley said, adding that old corrugated container prices -- a primary pressure on costs -- would further increase this month and next.
Curley said second-half demand was expected to remain stable at current levels while raw material costs were on an increasing trend.
The group, whose revenues are at the mercy of global trade, said tangible signs of economic recovery were limited in spite of the improvement in confidence indicators.
Smurfit Kappa said second-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) before exceptional items slipped 29 percent to 184 million euros in the three months ended June 30, from 257 million a year before.
That compared with 172 million euros forecast by five analysts polled by Reuters and was a slight improvement on the first-quarter figure of 180 million euros.
Eight analysts surveyed by Reuters Estimates forecast average EBITDA of 707 million euros for the full year, compared with the 941 million euros reported for 2008.
The group said its focus would remain on maximising cash flow generation and net debt reduction in 2009 and beyond. (Editing by Carmel Crimmins, Will Waterman and Simon Jessop)