The Jefferson Smurfit group has warned that weaker demand for packaging, a slowing US economy and increased costs will take its toll on profits at its US subsidiary Smurfit Stone in the next six months.
Smurfit Stone yesterday announced a 77 per cent drop in pre-tax profits in the fourth quarter of 2000 to $69 million (€75 million) compared with $296 million in the same period last year and signalled further downward pressure in the coming quarters.
Over a full year, the group, which is 33 per cent owned by Jefferson Smurfit, reported a 33 per cent increase in pre-tax profits to $225 million.
President and chief executive, Mr Ray Curran, said the stronger year-on-year performance was mainly due to higher average prices for the company's paperboard and packaging products. Its acquisition of the St Laurent Paperboard group in June 2000 also boosted the bottom line, adding $45 million to operating profits in the fourth quarter. Mr Curran warned though that profit growth would remain under pressure in the next two quarters because of adverse factors that would affect its US business.
After tax income available to shareholders was $67 million in the fourth quarter or 27 US cents a share. It earned 26 US cents per share from continuing operations, excluding restructuring charges of $1 million and an after tax gain of $6 million.
For the full-year 2000, net profit available to shareholders is $224 million of 96 US cents per share.
Mr Curran said the company had managed its finances to improve the efficiency of its mill system and to generate cash flow to reduce its debts. Company debt fell by $150 million in the fourth quarter with $572 million eliminated since the acquisition of St Laurent. At the end of 2000 total debt was $5.3 billion.
Jefferson Smurfit is in talks with struggling Venezuelan paper maker Venepal over buying a stake in the latter's Colombia cardboard box factory, a Venepal source said yesterday. However, he declined to comment on reports that Smurfit might buy a controlling stake in Venepal before a September deadline with creditors ran out.
