Smurfit-Stone Container swings to fourth quarter profit
Jan. 24, 2007 - Smurfit-Stone Container Corp. today reported net income available to common stockholders of $22 million, or $0.09 per diluted share, for the fourth quarter of 2006. These results include:
- A restructuring charge of $0.02 per diluted share primarily from the
closure of container plants and headcount reductions; and
- A $0.03 per diluted share gain related to a non-cash foreign currency
Fourth quarter 2006 results compare favorably to a net loss of $0.36 per diluted share for the prior year fourth quarter, which included a net $0.08 per share charge for litigation settlement, restructuring charges, and other unusual items.
Sales for the fourth quarter 2006 were $1.8 billion, compared to $1.6 billion in the fourth quarter of 2005.
For the full year 2006, Smurfit-Stone reported a net loss available to common stockholders of $71 million, or $0.28 cents per diluted share, compared to a net loss available to common stockholders of $339 million, or $1.33 per diluted share in 2005. Operating results for 2006 included restructuring charges of $0.10 per share compared to $0.82 per share in 2005. Sales for the year were $7.2 billion, compared to $6.8 billion in 2005. 2006 results reflect the sale of the company's Consumer Packaging operation on June 30, 2006.
Commenting on results, Patrick J. Moore, chairman and chief executive officer, said, "I am pleased with our fourth quarter performance and significant operating earnings improvement in 2006. Despite inflation on all key input costs, we improved our year-over-year operating performance due to higher prices for our products, excellent supply chain management, and cumulative benefits achieved during the first full year of our strategic initiatives program."
Fourth quarter operating profit was $146 million, up significantly from breakeven a year ago. Consistent with previous guidance, fourth quarter profits were down sequentially due to lower packaging volume as a result of fewer shipping days and plant closures during the quarter, additional mill maintenance downtime, and a turbine failure at the company's Florence mill. Average containerboard prices decreased slightly from the previous quarter due to customer mix changes.
Full year operating profit improved $242 million to $452 million in 2006. Average domestic linerboard and corrugated container prices increased approximately 15 percent and 5 percent, respectively, from the prior year. Containerboard production increased year-over-year, despite the closure of two mills in the third quarter 2005, demonstrating strong productivity improvement. Per-day box shipments declined 1.4 percent in 2006 primarily due to the rationalization of converting facilities as part of the company's strategic initiative program. Better supply chain management helped the company reduce containerboard inventory levels by 12 percent for the year.
"We made great progress on our strategic initiatives in 2006, exceeding our cost reduction goal for the year," Moore said. "I am encouraged by the acceleration of our box plant rationalizations as we closed 17 plants since the inception of our strategic initiatives program. Additionally, our restructuring efforts drove headcount reductions of approximately 2,000 during the year. Several equipment installations and upgrades were completed this past quarter, and future capital reinvestment will drive further productivity improvements."
Smurfit-Stone achieved $243 million in cumulative benefits from its strategic initiatives program, compared to the company's target of $240 million by year end. Savings under this program and improved pricing more than offset significant cost inflation primarily in the areas of labor and benefits, freight, energy, fiber, and chemicals. Total debt at year end 2006 was $3,634 million, down $89 million during the quarter and $937 million for the year, principally due to the sale of the Consumer Packaging operation in the second quarter.
Commenting on the company's 2007 outlook Moore said, "We expect a meaningful year-over-year improvement in 2007 operating results. Consistent with prior years, we anticipate our first quarter results will be impacted sequentially by seasonal factors, including lower mill production, higher energy usage, increasing fiber costs, and timing of employee benefit expenses. However, we anticipate that earnings will rebound beginning in the second quarter."
SOURCE: Smurfit-Stone Container Corp.