For the first nine months, Smurfit-Stone earned $157 million, compared with a year-ago loss of $129 million. Sales for the nine months were $6.290 billion, compared with $5.227 billion in the same period last year. Smurfit-Stone's sales and earnings include the results of St. Laurent Paperboard Inc. since June 1.
Ray Curran, president and CEO, explained that the significant increase in third quarter profitability reflected substantial year-over-year price increases for containerboard, market pulp and packaging as well as synergy savings, including improved efficiency in its mill system. Strong profits from the folding carton and boxboard operations also contributed to the improved third quarter results.
``As important as our year-over-year profit improvement was our increase in earnings over this year's second quarter,'' Curran said. Excluding restructuring, third quarter operating profit improved significantly over this year's second quarter, reflecting firm prices for packaging, reduced costs for recycled fiber, efficiency improvements, and the addition of St. Laurent.
Curran noted that the improvements were achieved in spite of higher energy and chemical costs and 324,000 tons of downtime in Smurfit-Stone's containerboard mill system, most of which was taken to manage inventories in a market in which demand for packaging remains flat. Excluding maintenance, third quarter downtime increased 56 percent over second quarter levels, to about 15 percent of the company's containerboard capacity.
Curran said the factors affecting third quarter results will carry over in the fourth quarter. ``We should benefit from stable recycled fiber costs and our own initiatives to improve operations. However, this environment remains a difficult one for paper and packaging companies. Key manufacturing sectors are slowing partly because of higher interest rates. Of greater impact has been the strong dollar which has encouraged imports and dampened exports of domestic goods that would be shipped in US-made packaging,'' he said.
``We must continue to manage inventory and working capital by curtailing mill production indefinitely. We may see little sequential improvement in fourth quarter performance as a result. However, Smurfit-Stone has a solid foundation and operating momentum that stand us in good stead in a demanding market environment,'' Curran said.
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