Smurfit-Stone Container Posts Adjusted 3Q Loss
Oct. 22 /PRNewswire-FirstCall/ -- Smurfit-Stone Container Corporation today reported third quarter 2008 net income available to common stockholders of $62 million, or $0.24 per share. As previously reported, earnings benefited $84 million, or $0.33 per share, from the favorable resolution of Canadian income tax matters.
3Q 2008 2Q 2008 3Q 2007
- Net income (loss) available to common stockholders per diluted share ...$0.24 $(0.16) $(0.38)
- Non-cash foreign currency exchange (gains) losses - Canadian dollar ...(0.03) 0.02 0.09
- Loss on sale of assets ... – – 0.38
- Restructuring charges ...0.04 0.02 0.03
- Resolution of income tax matters ...(0.33) – –
- Pension curtailment ... – – (0.01)
- Adjusted net income (loss) available to common stockholders per diluted share ...$(0.08) $(0.12) $0.11
Adjusting for items detailed in the chart above, Smurfit-Stone reported a third quarter 2008 adjusted net loss of $21 million, or $0.08 per diluted share. Results compare to adjusted net income of $28 million, or $0.11 per share, in the third quarter 2007 and an adjusted net loss of $31 million, or $0.12 per share, in the second quarter 2008.
Sales of $1.9 billion for the third quarter 2008 were up 2.3 percent on a sequential basis and were comparable to the third quarter 2007.
Commenting on the company's third quarter performance, Patrick J. Moore, chairman and CEO, said, "As expected, our adjusted earnings improved from the second quarter. We raised our containerboard and box prices and both mill production and box shipments improved. Higher selling prices and greater volume more than offset incremental cost inflation. To guard against rapidly increasing commodity inflation, we expanded our hedging program earlier this year. However, as energy prices declined sharply later in the third quarter, we incurred a $0.04 per share loss related to our hedge position. We continued to make progress implementing our transformation plan and we remain on-track to realize $525 million in cumulative savings this year. Our liquidity improved in the third quarter and we remain in compliance with all financial covenants."
Third quarter highlights:
- Segment profits: $100 million, up $26 million sequentially, down
$82 million from prior year
- Domestic containerboard and box prices improved both sequentially and
- Sequential volume improvement: mills 1.5 percent; per-day US box
shipments 2.4 percent
- Cost inflation: $22 million sequentially, $110 million year-over-year
- Closures: 4 converting plants; headcount reduction: 229
- Additional closures announced: 4 converting plants, Snowflake paper
machine, Pontiac mill
- Reported debt was $3.57 billion, flat with second quarter 2008.
Commenting on third quarter operations, Steven J. Klinger, president and COO, said: "Despite continued cost inflation, our operating profits increased from the second quarter as we implemented our July price initiatives and volumes improved. Mill production increased 33,000 tons. Our per-day US box shipments improved 2.4 percent sequentially but declined 1.2 percent from the prior year. Excluding the impact of box plant closures, adjusted shipments were down 0.4 percent from the prior year. This compares favorably to the 3.4 percent decline in industry demand. Our adjusted shipments outperformed trends reported by the Fiber Box Association for the fourth consecutive quarter.
"Unprecedented energy inflation earlier this year drove higher freight and chemical costs in the third quarter while hurricanes impacted wood fiber and other input costs," Klinger said. "We made continued progress with our strategic initiatives and expect to complete the program in the first half of 2009. Our two new greenfield plants commenced operations recently, we closed four higher cost box plants, and announced four additional closures. As a result of these closures, we reduced headcount by 229 positions. Furthermore, we shut our Snowflake, AZ, medium machine on October 15 and announced our intent to close our Pontiac pulp mill at the end of October."
Outlook – Improved Financial Performance
While the global slowdown is impacting the US packaging market, Smurfit- Stone currently expects improved sequential results in the fourth quarter driven by higher selling prices and lower costs.
"We are focused on margin restoration as we complete our July price initiative following unprecedented cost inflation earlier this year," Moore said. "Earnings will benefit from higher selling prices and moderating commodity costs due to lower freight and recycled fiber prices. Furthermore, our transformation program will drive incremental savings. We are taking the necessary steps to ensure sufficient financial flexibility given turbulent financial markets and uncertain economic conditions."
SOURCE: Smurfit-Stone Container Corp.