Jefferson Smurfit reported unchanged first half pre-tax profits today from the same period last year but said there was the potential for a demand-led recovery in the sector.
Smurfit posted pre-tax profit of €175 million on turnover up 5 per cent to €2.33 billion. Earnings per share rose 10 per cent to 9.1 cents, while the first half dividend rose 5 per cent to 2.625 cents.
The numbers represented a credible performance in a rapidly changing operating environment and reflected year-on-year earnings growth from European and Latin American businesses, Smurfit said in a statement.
Profit before interest, exceptional items and tax decreased 2 per cent to €313 million, reflecting a decline in contributions from associates, particularly Smurfit-Stone Container in the US, it said.
Smurfit-Stone, of which Smurfit Group owns around 30 per cent, reported first half pre-tax profit of $86 million, down from $154 million previously.
Mr John Sheehan, analyst at NCB Stockbrokers in Dublin said the figures were broadly in line with expectations.
"They are talking about a recovery in the sector but given conditions in the US economy I think that's good way off," he said adding he would be lowering his year forecast.
Commenting on the prospect of a US recovery, Smurfit’s chief operating officer Mr Gary McGann said "It's very difficult to say when as there is a lack of near term visibility but we can say the industry is well positioned to take advantage of the turn when it comes."
Mr McGann noted that despite difficult trading conditions, Smurfit's cash flow from earnings had been significantly higher in the first half of 2001, with free cash flow up 89 per cent or euro 42 million on the first half of 2000.
The group also planned to step up efforts to trim non-or-poorly-performing businesses, he said. While he declined to go into detail he said this would be on a relatively small scale but would add to the bottom line in the future.