Digital Magazine

Smurfit-Stone Q1 Affected by Lower Selling Prices and Higher, Energy, and Benefit Costs, Says Mfr.

CHICAGO, IL, USA—Smurfit-Stone Container Corp. (SSCC) reports it expects a first quarter 2004 loss of approximately $0.22–$0.25 (US) per diluted share. Lower selling prices and higher energy, fiber, and employee benefit costs are affecting earnings in the quarter adversely, says the Chicago-based manufacturer.

According to SSCC, prices for corrugated containers will likely decline approximately $10 million in the first quarter 2004 compared to the fourth quarter 2003. Recovered fiber and energy costs are expected to exceed those of the fourth quarter 2003 by an estimated $20 million, and employee benefit costs also are estimated to be $20 million higher in the first quarter 2004 compared to the prior quarter, explains the company's press release.

States SSCC chairman, president, and CEO Patrick J. Moore: “As previously disclosed, we expected a difficult first quarter. We anticipated the unexpected containerboard price decreases we saw in the fourth quarter would affect us this year adversely. That decrease has also had a negative impact on selling prices for containers versus the fourth quarter. Energy prices, especially natural gas, have been persistently high throughout the first quarter. Finally, recycled fiber prices, responding to higher mill operating rates and greater export demand, have risen faster than expected," he says. Adds the company: "These factors and higher employee benefit costs have created greater than expected pressure on operating margins."

Moore also stresses that, despite the margin pressures, demand for packaging is increasing at a steady pace, paving the way for price and margin improvement in the remainder of the year. “Although the return to profitability is taking longer than expected, demand is increasing, our inventories remain low and our mill operating rates are healthy. We have begun to implement containerboard and corrugated container price increases as planned, and we have advised customers of increases on coated boxboard, bleached board, and market pulp," Moore says.

Visit SSCC at smurfit-stone.com.

Subscribe to PFFC's EClips Newsletter