Venezuela looks to take away additional 7,253 ha. of Smurfit Kappa's land holdings, but analyst says country is not interested in company's production assets
September 1, 2011
– Venezuela issued precautionary measures over an additional 7,253 ha. of Smurfit Kappa Group Plc’s forestry land, said a company report, yet an analyst said the country has shown no interest in the company’s production assets, reported Bloomberg on Sept. 1.
The filing said the government was looking to acquire privately owned land and convert it to food production.
The company currently operates 12,000 ha. of land within the country, said Agriculture Minister Juan Carlos Loyo.
Venezuelan President Hugo Chavez did not say if the government was planning to take over all of Smurfit Kappa’s land or just areas that solely serve tree farming.
In 2009, the county seized 1,500 ha. of eucalyptus plantation land. Chavez said the trees had used up water sources needed for vegetable farming irrigation.
“The important thing is that Chavez is not looking to get his hands on all of the production assets, just the forests,” said Robert Eason, an analyst at Goodbury Stockbrokers in Dublin.
For the first three quarters of 2010, Venezuela made up around 4% of Smurfit Kappa’s total revenue, the company reported in November.
Company shares fell 1.6% to €5.43 in Dublin around 3:00pm on Sept. 1. The stock fell a total of 26% this year so far, Bloomberg reported.
According to the company website, Smurfit Kappa’s affiliate SK Cartón de Venezuela operates from several locations in Venezuela and produces materials ranging from containerboard, boxboard, corrugated boxes, and paper sacks.
The primary source of this article is Bloomberg, New York, on Sept. 1, 2011.