Any potential share buyback at packaging giant Smurfit Kappa is at least a “couple of years down the road” as the group continues to focus on acquisitions, dividends and investing in its business, according to chief executive Tony Smurfit.

He also told the Irish Independent that for the foreseeable future, the group will also continue to use cash for acquisitions rather than any mix of shares and cash.

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Mr Smurfit also confirmed that €85m of planned investments in the UK for two major projects remain on hold because of Brexit uncertainty.

Smurfit Kappa generated cash of €494m during 2018, compared to €307m the year before.

From 2018’s figure, it paid out €219m in dividends and spent €516m on acquisitions and investments, which primarily represented its €460m purchase of Dutch firm Raparenco. Capital expenditure for 2018 was €574m.

“We’ve got dividends, good acquisitions which we’ve done, investments in our business and balance sheet strength,” Mr Smurfit said.

“If your balance sheet is over-strong and you’re able to do all those other three things, then of course, buybacks are always possible.”

He added: “We’re not there yet. We have plenty of opportunity to invest in our business, plenty of opportunity on the dividend, and plenty of opportunity on acquisitions, so that’s a couple of years down the road I would think.”

The chief executive said that cash will continue to be the preferred method for making acquisitions.

“You would normally prefer to use cash,” he said. “Obviously, the bigger it is and the more substantial the acquisition, the idea of using shares would come in. We spent a lot of time getting our balance sheet into a shape that is rock-solid. Today, our balance sheet is in remarkably good shape… for a large acquisition we’d just take advice on what’s the best way to finance it.

“Sometimes when you’re doing large acquisitions, the other side might want your shares,” added Mr Smurfit.

“We’re an undervalued share, so when that changes I don’t know, but it will change at some future point and people will see a double appreciation – they sell their business to us and then they get share appreciation,” he said.

“Debt is cheap these days but cash is the cheapest form of financing. But obviously it just depends on size. It’s not our intention to buy something with shares.”

Smurfit Kappa’s shares have declined 25pc since June last year, when US firm International Paper called off a €9bn takeover pursuit.

Smurfit Kappa’s current share price gives it a market capitalisation of about €6.5bn.

International Paper is currently about half-way through a $2bn (€1.78bn) share buy back programme that was launched last autumn.

Smurfit Kappa reported a strong first quarter last week.

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