Shaping the financial journey of Smurfit Kappa Group

27 October 2017

A new entrant to the FTSE 100, Smurfit Kappa Group (SKG) has achieved big things in recent years. The Dublin-based company has seen a steady rise and, with operations now spanning three continents and 34 countries, controlling the finance function of this giant of the industry is no easy task. Stephen Hall sits down with Ken Bowles, who has been part of SKG’s journey for almost 25 years, to discuss his first year as group CFO, managing complexity and leading the search for the finance directors of the future.

The story of Smurfit Kappa began when founder Jefferson Smurfit Sr started making boxes in the Dublin suburb of Rathmines in 1934. In 1950, Smurfit decided to concentrate on corrugated box production and built two paper machines. Since those humble beginnings, Smurfit Kappa Group (SKG) has developed hundreds of plants around the world and become one of the most successful packing companies in Europe. It now produces over seven million tons of paper and board a year – enough to fill the streets of Rathmines many times over.

What you have to do as CFO is step away from the numbers and allow others to give you what you need.

Ken Bowles’ 23 years of service with SKG has included roles in various parts of the company, and he has been central to the strong performance of the broader corporate and finance team for many years. In 2004, the Dublin native was appointed the group’s first head of compliance. This was followed by a role as head of tax before Bowles became group financial controller in 2007. He was appointed chief financial officer in April 2016, and this rapid transition is a reflection of the company’s growth as a whole.

Ambitions and decisions

“When I joined the group in 1994, it was maybe a quarter of the size it is now,” Bowles recalls. “The very first thing I did was go on to what was then the single largest acquisition in Irish company history at the time. From there, we’ve seen it go private in 2005 and public again in 2007, and continue to acquire and grow. I’ve been very much part of that story in a variety of roles.”

His role in the story of Smurfit Kappa has evolved from an array of supporting characters to one of its lead protagonists. Even though it’s a well-trodden path from controller to CFO, Bowles admits his universe has altered exponentially in the past year.

“I’ve had to change my approach,” he explains. “You have to accept that you don’t have the time to do everything you used to as the group controller. I was the classic control freak, and the role of group controller is exactly what it says on the tin. What you have to do as CFO is step away from the numbers and allow others to give you what you need.”

Bowles’ period of service is not atypical of a SKG employee. Irene Page, his successor in the role of group financial controller, has also spent over 20 years with the business. The CFO admits that this seamless succession has helped him make the step up, and he’s happy to allocate his old duties to Page and the finance team while navigating the more strategic side of his responsibilities.

“I think I’ve moved from number cruncher to support partner,” he says. “Now, my role involves making those big decisions and supporting the ambitions of the business.”

And those ambitions are grand. Having transferred its primary stock market listing from Dublin to London earlier in the year, Smurfit entered the FTSE 100 in December 2016, becoming the fifth present Irish member of this most prestigious of clubs. It was the result of a long-term turnaround programme that saw the group increase its market capitalisation fivefold in just five years – but, despite all the success, such heightened visibility surely brings its own pressures for the man heading up the finance function.

In the spotlight

“The position in the FTSE 100 puts you in the public eye,” says Bowles. “Errors and mistakes are broadcastable. We’ve always been a big company, FTSE or not, so that pressure has always been there. There is more of a spotlight on you, and you have to understand the pitfalls that go along with that. For a long time, we’ve made sure we had the right framework in place to deal with our position in the FTSE 100.”

It helps if a company can remain anchored to a set of core principles and, sure enough, there are still elements of this multinational corporate that would be recognisable to its 1930s Rathmines origins. This is demonstrated at the very top, with Tony Smurfit, grandson of founder Jefferson, appointed CEO in September 2015. One gets the impression from Bowles that he is fully invested in this sense of being part of a family business.

At Smurfit Kappa, the one thing we never lack is help and support. And, in a role like this, you need it.

“It’s funny – it’s been a 20-year journey, and what always surprises you is the level of support and help you get from your colleagues, even though you’ve been around for a long time,” he says. “At Smurfit Kappa, the one thing we never lack is help and support. And, in a role like this, you need it.

“When I joined, in 1994, it was a top-class finance team. I suppose the discipline and learning has been to keep that going. In everything we do, it’s about excellence in the finance function. That’s a heavy price in that it doesn’t suit everybody. But we have a finance team that has broadly stayed together now for all of those 20 years and that’s because it’s a very engaging environment, and the level of opportunity is huge if you’re willing to put yourself out there.”

The CFO has certainly taken those opportunities when they’ve come around but controlling the finance function at a company with over 40,000 employees can be a heavy responsibility. Bowles joined the group in the year that train travel between France and the UK became possible, Nelson Mandela won the South African presidency, and Prince Charles admitted extramarital infidelities. It’s fair to say that much has changed since. And Bowles recognises that more than two decades at SKG have played a big part in his approach to leadership.

“It would be hard to have been at SKG for that amount of time and not have it play a key role in how I go about things,” he acknowledges. “There was a set of disciplines back then. If you go back to 1994, it’s a very different world to the one we live in now. We’re talking pre-internet, pre-Apple products. Life was probably much simpler. Reporting lines and reporting times were longer, so you had a lot more time and space to get things right.”

You need to understand consumer behaviour and how packaging is going to react in that space. You need to look at the global macro trends that could disrupt your strategy.

Thinking forward

As the world has changed, so too has the global consumer packaging industry, which is now valued at €360 billion.

“What I’ve seen in the past 10–15 years is an evolution towards packaging being a method of selling and much more of a marketing medium,” Bowles says. “The rise of the discount retailer has been key to that.”

Like any modern CFO, it’s no surprise that Bowles is more than just a finance expert and also views himself as a strategist, taking great interest in the industry as a whole.

“To stay competitive is about understanding our business strategy, and we look at consumer trends because, ultimately, where our customers are heading is where we end up as a partner to them,” he says. “You need to understand consumer behaviour and how packaging is going to react in that space. You need to look at the global macro trends that could disrupt your strategy. If you understand where your customer is going and how you can support them in getting there, I think that gives you a massive competitive advantage.”

To stay ahead, SKG employs 700 designers across the business to influence customer choice.

From egg boxes and strawberry containers to cat houses and award-winning cardboard tents that can absorb 400% of their weight in water, the repertoire of innovative design is impressive. As the financial strategist at the head of this creative portfolio, Bowles has no choice but to be rooted in the here and now, but he is also keen not to take his eyes off the next generation coming through.

“An essential component of this is finding the people who want to be CFO of SKG in ten years’ time,” he says. “If you think about the millennial challenge around people wanting varied and different careers, the problem is finding people within the company, but it should be possible, given that we have 45,000 people in 34 countries.”

Bowles reasons that the Smurfit approach of constant engagement, help and support has been the catalyst of his long stay at the company, and will be the motivator for the financial and senior executive stars of the future.

“The ability to strive and achieve whatever you want as long as you’re willing to put in the effort – that feeds into our approach,” he says. “The challenge with myself and Tony is how we create the management team of the future. Because we’re going to need them soon enough.”

A look at tomorrow

As Bowles looks to the sustainable future of the management team of SKG, the company is just as committed to its impact on the future of the planet. While it has been a big year for Bowles, it has also been a good year for the company’s sustainability goals. During 2016, SKG achieved a 22.9% reduction in CO2 emissions from 2005. Among its other environmental goals, the company has planted 103,000ha of forestry to date and is on target to reach a 25% reduction in CO2 emissions by 2020.

The finance function is also very much involved in driving the group towards a more sustainable future and, with so many plates to keep spinning, one wonders how Bowles finds time to relax. He acknowledges that the CFO role can be an all-consuming one, but he still makes time to unwind.

“Family first,” he insists. “I’m lucky to have a very supportive wife. I’m a keen cyclist, and my big love is music. I’m a big mod, and I love Northern soul and the Jam.”

If there’s one piece of advice he could offer himself, looking back on his 12 months in charge, it would be to learn to revel in the challenge.

“Enjoy it and breathe,” he reflects. “It’s a big step up, even though I’ve been in the group for over 20 years, and I was the controller and very much part of the management team. You put a lot of pressure on yourself.

“You have more time than you think you do,” he would tell his younger self. “And it’s also okay to say no to people now and then. These days, I tend to try to enjoy the day and worry about tomorrow when it comes.”

Ken Bowles, CFO at Smurfit Kappa Group: enjoy the day and worry about tomorrow when it comes.