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lost money in the second quarter, as higher energy and fiber costs and increased employee-benefit expenses hit the bottom line, and the company forecast a "modest loss" for the second half of 2003.
The container and packaging maker reported a loss of $5 million, or 3 cents a share, for the second quarter, compared with earnings of $23 million, or 8 cents a share, a year ago. The 2003 second quarter includes a charge of 5 cents a share, for a noncash currency-translation loss related to the strengthening of the Canadian dollar. The results also include a tax benefit of 5 cents a share.
Sales rose to $1.99 billion from $1.87 billion in the second quarter of 2002.
Smurfit-Stone said the sequential improvement from the first to the second quarter primarily reflected seasonal volume increases and higher shipments due to acquisitions. "Overall, the industry continued to confront sluggish demand during the period," the company said. "However, pricing remained stable in the second quarter. Smurfit-Stone continues to deliver on its pledges to strengthen the balance sheet, build back market share and produce only to meet orders."
In the second quarter, Smurfit-Stone's North American corrugated container shipments were up 9% from first-quarter levels and 5% compared with last year. The results benefited from the purchase of the remaining 50% of Canadian corrugated producer Smurfit-MBI and the acquisition of the former
plants in late 2002.
Citing soft demand, Smurfit-Stone said its container-board mills continued to take substantial downtime in the quarter. The company's operating rate for the second quarter was 90.4%, compared with 89.2% for the prior-year period and 90.1% for the first quarter.
Consumer-packaging profits fell $13 million from a year ago, but were flat with the first quarter. Multiwall bag shipments rose 4.7% from the first quarter.
For the first half of the year, Smurfit-Stone reported a loss of $35 million, or 17 cents a share, compared with year-ago earnings of $32 million, or 11 cents a share.
Sales for the first half climbed to $3.87 billion from $3.63 billion in the first six months of 2002.
The company said it "will face significant challenges in the second half of 2003. Although we anticipate continued low inventory levels, higher operating rates and pricing improvement will be dependent upon a sustained pick-up in business activity. We expect to see improvement over first-half performance while posting a modest loss in the second half of 2003."
Analysts polled by Thomson First Call expected a loss of 5 cents in the second quarter. Wall Street expects the company to break even in the third quarter and report a profit of 5 cents in the fourth quarter.