CHICAGO, April 25, 2006 — Smurfit-Stone Container Corporation (Nasdaq: SSCC) today reported a net loss available to common stockholders of $64 million, or $0.25 per diluted share, for the first quarter of 2006. These results compare with a net loss available to common stockholders of $19 million, or $.07 per diluted share, for the first quarter of 2005. First quarter 2006 results include:
- Gains totaling $0.06 per diluted share from the divestiture of the Port St. Joe joint venture interest and a non-cash foreign currency translation adjustment.
- A restructuring charge of $0.02 per diluted share primarily related to the closure of three corrugated container facilities.
Net sales for the period were comparable to the year-ago period, at $2.1 billion.
Commenting on the first quarter, Patrick J. Moore, chairman, president and chief executive officer, said, “Current market conditions are improving, and we are optimistic about the outlook for our business. However, as we had expected, year-over-year results were negatively impacted by higher costs, especially energy and freight, and lower containerboard and corrugated prices, despite benefits achieved from our strategic initiatives.”
Smurfit-Stone’s containerboard and corrugated containers segment reported a first quarter 2006 operating profit of $9 million, a $14 million sequential improvement. However, results were below the prior year first quarter profit of $66 million due to lower prices and higher costs as discussed above. Containerboard production decreased sequentially as a result of two fewer production days and additional scheduled maintenance downtime. Containerboard inventories declined and stood at seasonally low levels at the end of the first quarter. Average domestic linerboard prices increased 10 percent sequentially while corrugated container prices improved 3.6% in the first quarter of 2006 as compared to the fourth quarter of 2005.
First quarter 2006 consumer packaging profits of $16 million were up $1 million year-over-year, but down $4 million on a sequential basis.
Total reported debt at the end of the quarter was $4,719 million, an increase of $148 million from year end levels, principally due to higher working capital levels.
The company benefited $35 million from its strategic initiatives in the first quarter compared to cost levels prior to the commencement of the initiatives. Cumulative initiative benefits, including savings realized in 2005, total $80 million. Initiative benefits were driven by facility closures, including two containerboard mills and five corrugated plants. As a result of these activities and improved productivity, total headcount has been reduced by over 2,200 since June 2005.
Commenting on the outlook, Moore said, “Prices for our products have rebounded, and we are entering a seasonally stronger period for packaging demand. Furthermore, we will continue to generate benefits from our strategic initiatives. These factors will have a meaningful impact on our future financial results. We are encouraged by these trends and anticipate second quarter results to improve significantly, but not to breakeven levels. We expect to return to profitability in the third quarter.”
Smurfit-Stone management will discuss its first quarter 2006 financial performance via live webcast, including a slide presentation, at 8:00 a.m. CDT (9:00 a.m. EDT) on Tuesday, April 25. The webcast will be archived to the investors’ page of the company website, www.smurfit-stone.com.
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Smurfit-Stone Container Corporation (Nasdaq: SSCC) is the industry’s leading integrated manufacturer of paperboard and paper-based packaging. Smurfit-Stone is a leading producer of containerboard, including white top linerboard and recycled medium; corrugated containers; point-of-purchase displays; multiwall and specialty bags; and clay-coated recycled boxboard; and is one of the world’s largest collectors and marketers of recovered fiber. In addition, Smurfit-Stone is a leading producer of solid bleached sulfate, folding cartons, flexible packaging, and labels. The company operates approximately 240 facilities, located primarily in the U.S., Canada and Mexico, and employs approximately 33,500 people.
This press release contains statements relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in general economic conditions, continued pricing pressures in key product lines, seasonality and higher recycled fiber and energy costs, as well as other risks and uncertainties described in “forward-looking statements” in the company’s annual report on form 10-K for the year ended December 31, 2005, as updated from time to time in the company’s Securities and Exchange Commission filings.
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John Haudrich (investors), 314-746-1266
Tom Lange (media), 314-746-1236
Mylene Labrie (Canadian media), 514-864-5103