Smurfit-Stone Reports Third Quarter Profit
October 24, 2006 (Press Release) Smurfit-Stone Container Corp. today reported net income available to common stockholders of $15 million, or $0.06 per
diluted share, for the third quarter of 2006. These results include:
- A restructuring charge of $0.03 per diluted share primarily related to the closure of
five container plants; and
- A $0.01 per share charge from post-closing adjustments following the sale of the
consumer packaging operations in the second quarter.
These results compare with a net loss of $0.90 per diluted share for the third quarter 2005,
which included a $0.75 per share restructuring charge and a $0.04 per share charge related
to a non-cash foreign currency translation loss.
Sales for the third quarter 2006 were $1.8 billion, compared to sales of $1.7 billion in the
third quarter of 2005.
For the nine months ended September 30, 2006, Smurfit-Stone reported a net loss available
to common stockholders of $93 million, or $0.36 per diluted share, compared to a net loss of
$247 million, or $0.97 per diluted share, a year ago. Sales for the first nine months were
$5.3 billion in 2006, compared to $5.2 billion in 2005.
Commenting on quarterly results, Patrick J. Moore, chairman and chief executive officer,
said, “Our results have shown continued improvement over the past four quarters and we
are pleased with the the company’s profitability in the third quarter. Results were driven by
higher containerboard and corrugated container prices, excellent mill productivity, and
benefits achieved under our strategic initiatives.”
Results for the quarter were negatively impacted $0.03 per diluted share related to
disruption from Hurricane Ernesto at the company’s West Point, VA, mill (8,000 tons of lost
production and additional maintenance expense) and energy hedge charges resulting from
Smurfit-Stone’s core business, its containerboard and corrugated containers segment,
reported a third quarter operating profit of $165 million, up from $118 million in the second
quarter and $34 million in the prior year quarter. The company’s average domestic kraft
linerboard price increased 5 percent and corrugated container average prices increased 3.2
percent as compared to the prior quarter. Containerboard production was up 1.5 percent
sequentially. Per day corrugated container shipments were down 1.2 percent year-overyear
primarily due to the announced closure of 13 container plants since last year.
Operating profit was negatively impacted by higher costs, primarily fiber and freight.
Total reported debt at the end of the quarter was $3,723 million. Year-to-date, debt declined
$848 million, principally due to the application of proceeds from the sale of the Consumer
Packaging operations in the second quarter. Third quarter interest expense was down $18
Regarding the company’s strategic initiatives, Moore said, “While we are in the early stages
of our three-year program, I am pleased with our progress to date.”
Year-to-date, the company benefited $156 million from cost reduction efforts under its
strategic initiatives, helping offset inflationary cost pressures. Benefits were primarily driven
by higher productivity, facility closures, and headcount reductions of more than 3,200, or 12
percent, since June 2005.
Commenting on the outlook for the fourth quarter, Moore said, “Our operating profits have
improved significantly throughout 2006 due to higher prices, mill productivity, and benefits
from our strategic initiatives. However, we expect lower fourth quarter mill production due to
additional scheduled maintenance downtime. Also, energy costs will increase due to
seasonally higher usage. Consequently, we anticipate our fourth quarter profits will be lower
than the third quarter 2006. We look forward to continued earnings improvement in 2007.”