Smurfit-Stone 3Q earnings down 4.4%

By Dow Jones Newswires
Posted Nov. 1, 2010 at 7:37 a.m.

Smurfit-Stone Container Corp.’s third-quarter earnings fell 4.4 percent excluding preferred-dividend impacts as the packaging company reported higher revenue and margins on price hikes, but was hurt by income-tax impacts.

Profit topped analysts’ expectations, with Chief Executive Officer Patrick J. Moore saying the quarter benefited from “favorable pricing trends” and lower input costs, mostly for fiber, as well as savings owing to its restructuring and other initiatives.

The company said its work force was reduced by 460 positions in the quarter and about 1,368 so far this year. Smurfit didn’t say how many employees it has and a spokesman wasn’t immediately available for comment.

Overall, the company expects to cut its overhead costs through shedding more than 14% of its backoffice staff in 2010.

Looking ahead, Smurfit-Stone expects “moderately” lower earnings in the fourth quarter from the third quarter on expectations that continued price improvement will be more than offset by higher costs. Analysts were expecting the per-share figure to drop to 52 cents from 61 cents, according to Thomson Reuters.

The packaging industry has seen demand for corrugated containerboard improve earlier this year, pushing through two price hikes, though an attempt in August failed amid worries about a slowing economic recovery.

Smurfit reported a third-quarter profit of $65 million, or 65 cents a share, compared with $68 million, or 25 cents a share, a year earlier. Shares outstanding fell 61% as the company exited bankruptcy earlier this year. The latest quarter included 11 cents of charges.

Revenue climbed 15% to $1.63 billion.

Analysts polled by Thomson Reuters most recently forecast earnings of 61 cents a share on revenue of $1.66 billion.

Gross margin soared to 17.7 percent from 9.4 percent amid the price hikes. But that was offset by a $49 million income-tax provision in the latest quarter, compared with a $2 million benefit last year.

The results come as Smurfit is about to see changes at the helm. Moore plans to retire by early next year, announced in August. Searches are under way to fill his post and to find a chief financial officer. On Wednesday, President and Chief Operating Officer Steven J. Klinger unveiled plans to resign effective at year’s end. The company’s general counsel, Craig A. Hunt, adds the chief administrative officer role starting Monday.

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