Packaging

Smurfit-Stone Reports Fourth Quarter 2010 Results

Monday 24. January 2011 - Smurfit-Stone Container Corporation (NYSE: SSCC) today reported net income of $49 million, or $0.49 per diluted share, for the fourth quarter ended Dec. 31, 2010, compared with net income of $65 million, or $0.65 per diluted share, for the third quarter of 2010, and a net loss attributable to common stockholders of ($6) million, or ($0.02) per share, for the fourth quarter of 2009.

Smurfit-Stone’s fourth quarter 2010 adjusted net income was $62 million, or $0.62 per diluted share, down seasonally from adjusted net income of $76 million, or $0.76 per diluted share, in the third quarter of 2010, and an adjusted net loss of ($16) million, or ($0.06) per diluted share, in the fourth quarter of 2009. The adjustments in the third and fourth quarter of 2010 were primarily the exclusion of costs related to reorganization and restructuring.
Diluted Earnings Per Share Attributable to Common Stockholders
Fourth
Third
Fourth
Quarter
Quarter
Quarter
2010
2010
2009
Net Income (Loss) Attributable to
Common Stockholders
$0.49
$0.65
($0.02)
Adjustments
$0.13
$0.11
($0.04)
Adjusted Net Income (loss)
$0.62
$0.76
($0.06)
Weighted Average Shares (MM)
100
100
257
The Company reported operating income of $103 million for the fourth quarter of 2010, compared to operating income of $142 million in the third quarter of 2010, and an operating loss of ($131) million in the fourth quarter of 2009. The sequential decline in operating income is mainly due to seasonally lower volumes, higher mill annual outage costs, and cost inflation, including a substantial increase in reclaimed fiber costs during the fourth quarter.
Patrick J. Moore, Smurfit-Stone’s Chief Executive Officer, commented, “Fourth quarter performance was strong, meeting our expectations, and demonstrating that our initiatives to improve productivity and lower costs are enabling us to deliver improvement in earnings, margins and cash flow.”
Adjusted EBITDA for the fourth quarter of 2010 was $205 million, down from $239 million in the third quarter of 2010, and up from $67 million in the fourth quarter of 2009. The sequential decline in adjusted EBITDA reflects seasonally lower volumes, cost inflation, the impact of a work stoppage at the Company’s La Tuque, Quebec, mill, and market-related downtime taken in December in order to balance supply and demand in the Company’s system.
Net sales for the fourth quarter of 2010 were $1.63 billion, unchanged from the third quarter of 2010 and up 18 percent compared with sales of $1.38 billion in the fourth quarter of 2009. The stable sales in fourth quarter 2010 reflect modestly higher selling prices, offset by seasonally lower volumes.
Fourth Quarter Highlights
The Company achieved strong financial results despite higher reclaimed fiber costs, a work stoppage at its La Tuque facility and market-related downtime in the quarter.
Initial SG&A cost reductions were completed in the fourth quarter that will produce net savings of $50 million in 2011.
The Company ended the quarter with cash of $449 million, down only $15 million from the end of the third quarter, despite capital expenditures of $67 million and a voluntary $105 million pension contribution in the quarter.
The Company’s underfunded pension position improved to $1.13 billion at year end from $1.45 billion at June 30, 2010, reflecting strong asset returns and contributions totaling $199 million in 2010.
The Company ended 2010 with net debt of $745 million and liquidity of nearly $1 billion.
Outlook
Smurfit-Stone expects lower sequential earnings in the first quarter of 2011 compared with the fourth quarter of 2010. Moderate improvement in pricing will be more than offset by seasonally higher energy usage, cost inflation in fiber and energy, and the impact of employee benefit cost timing.