Smurfit-Stone Container Posts 1st Quarter Loss

April 22, 2008 - Smurfit-Stone Container Corp. yesterday reported a first quarter 2008 adjusted net loss of $24 million, or $0.09 per diluted share. Results were flat on a year-over-year basis, and down from adjusted net income of $23 million, or $0.09 per share, in the fourth quarter 2007. Adjusted net income (loss) reflects adjustments to net income (loss) available to common stockholders per diluted share, as detailed in the chart above.

Sales of $1.8 billion for the first quarter 2008 were comparable to both the prior year quarter and fourth quarter 2007.

Commenting on the company's first quarter, Moore said, "First quarter results were disappointing as we faced a challenging US business climate. We remain focused on transforming our operations and I expect continued savings from our strategic initiatives program will benefit future earnings. Selling prices improved for the fifth consecutive quarter as we completed our box price initiative from last fall. Despite this, earnings declined sequentially due to a charge related to Calpine Corrugated, seasonal factors, and significantly higher than expected cost inflation. The slower US economy also negatively impacted packaging demand." As previously announced, Smurfit-Stone expects to acquire a controlling interest in Calpine Corrugated LLC in the second quarter 2008. The first quarter results include a $0.05 per share charge related to Calpine.

First quarter operating highlights:

  • Seasonal factors and higher than expected cost inflation reduced earnings
  • Average box prices improved 1.2 percent sequentially
  • Per-day US box shipments down 4.4 percent year-over-year due to plant closures and business exits
  • Strong containerboard export demand and historically low containerboard inventory levels
  • Headcount reductions were 230 in the quarter, 5,580 since June 2005

Commenting on operations, Steven J. Klinger, president and COO, said: "The first quarter is typically a challenging period for our business due to softer packaging demand, the timing of employee benefit costs, and higher energy usage. The surge in oil prices further impacted energy, transportation, and chemical costs. While experiencing continued cost inflation, we successfully completed last fall's corrugated box price increase. Smurfit-Stone's per-day US box shipments were down 4.4 percent year-over-year. However, volume was flat when excluding the impact of box plant closures and efforts to improve low margin accounts. Our adjusted shipments compare favorably to the overall US market, which declined 0.7 percent as reported by the Fibre Box Association. While domestic packaging demand was down more than originally projected, containerboard export shipments were strong, our mills ran full, and our containerboard inventories remained low. We also made progress with our strategic initiatives program. In the first quarter, we closed one additional box plant and reduced headcount by 230 positions. Since June 2005, we have closed 29 box plants and headcount is down over 21 percent. While continued cost inflation is likely, we are on track to deliver targeted operational improvements in 2008."

First quarter financial highlights:

  • Reported debt of $3.48 billion at March 31, 2008
  • $94 million in capital expenditures

Commenting on the company's financial position, Charles A. Hinrichs, senior vice president and CFO, said, "Our debt increased in the first quarter due to the seasonal increase in working capital and capital spending in our converting operations. Over the past two years, Smurfit-Stone has significantly improved its financial flexibility by reducing debt more than $1 billion, lowering interest expense, and extending debt maturities."

SOURCE: Smurfit-Stone Container Corp.

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