Higher interest charges and weaker income from operations has contributed to a loss of $155 million (€147 million) at Smurfit Stone, in the six months to the end of June.

The half-year out-turn compares with pre-tax profits of $14 million (€13.3 million) in the same period last year at Jefferson Smurfit Corporation (JSC) which merged with the Stone Corporation in November 1998.

Announcing the results, Smurfit Stone, which is 33 per cent owned by the Jefferson Smurfit group, said that despite showing a loss the group's underlying performance was improving. Mr Ray Curran, president and chief executive officer of Smurfit Stone, said an increase in the price of corrugated containers and a generally improving market for packaging, had led to stronger sentiment in the last three months.

"We expect the market environment in the second half to provide strong support to our efforts to reestablish reasonable profit margins in paperboard and packaging. We noticed a marked improvement in demand for containers as we ended the quarter. Consumption of containerboard has been strong through the past two quarters and board supplies are very tight. As a result we expect our earnings to remain on an improving trend in the second half of the year," Mr Curran said.

Total income from its operations during the half-year period fell from $115 million (€109 million) in the six months to the end of June compared to $110 million (104.7 million) in the same period last year. Interest costs were also markedly higher reflecting the huge amount of debt held by Smurfit Stone. Total interest charges during the six months rose to $296 million, up from $100 million in the same period last year.

Smurfit Stone also announced the appointment of Smurfit's chief operations officer, Mr Howard Kilroy, to the board of the US group.

Smurfit Stone was formed in November 1998 as a result of the merger of Jefferson Smurfit and the Stone Container Corporation. It operates 300 facilities worldwide and employs more than 30,000 people.