July 29, 2008 / 12:56 AM / 11 years ago

Smurfit-Stone posts bigger 2nd-qtr loss

NEW YORK (Reuters) - Smurfit-Stone Container Corp SSCC.O, the largest U.S. maker of paper-based packaging products, posted a bigger second-quarter loss on Monday on higher energy, freight and chemical costs.

The quarterly net loss increased to $40 million, or 16 cents a share, from $5 million, or 2 cents a share, a year ago, when it was hurt by several one-time items.

Excluding items, the company lost 12 cents a share, compared with a year-ago profit of 6 cents a share.

Quarterly sales fell 1.9 percent to $1.84 billion, as year-over-year box shipments declined 5 percent, in part due to some plant closures.

Analysts, on average, had expected a quarterly loss of 11 cents a share, on revenue of $1.85 billion, according to Reuters Estimates.

In a note to clients, Deutsche Bank analyst Mark Wilde noted that the weaker-than-expected results were mainly due to cost inflation issues.

Smurfit-Stone expects that price increases it is currently implementing will, on an annualized basis, entirely offset the impact of increased costs, Chief Executive Patrick Moore said in a phone interview.

Moore expects the box price increases it plans to push through will, for the most part, get implemented by the end of the third quarter or by early in the fourth quarter.

“We haven’t formally announced everything, but we will continue to have further (box) plant closures through the course of 2008,” Moore said, adding that there would also be additional job cuts over the rest of 2008.

The company trimmed 150 jobs in the second quarter and has cut about 5,700 jobs since it began its restructuring program in 2005.

“When you get to the end of the year, you will likely see negative year-over-year growth in shipments,” Moore said, but added that some months in the latter half of the year may show favorable comparisons with a year ago.

The company said higher average selling prices and increased mill production should drive sequentially higher earnings in the third quarter, despite continued cost inflation.

Moore also said the company was comfortable with its liquidity and expects to remain in compliance with its financial covenants in 2008.

Shares of Smurfit-Stone have fallen more than 50 percent year-to-date and closed at $5.13 on Monday on the New York Stock Exchange.

Editing by Jeffrey Benkoe and Braden Reddall

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