Smurfit profits fall 58% on Europe market woes

PROFITS at the paper and packaging group Jefferson Smurfit slipped in the three months to the end of June.

The company, now called JSG Funding, said pre-tax profits fell by 58% to €12.9 million from €20.4m a year ago. Turnover for the three months was flat at €1.08 billion.

Smurfit chief executive Gary McGann said the decline reflected tough European market conditions.

“Europe is a market characterised by capacity growth which significantly exceeds demand growth. We expect these conditions will prevail unless there is either a significant and sustained increase in demand for corrugated or structural change within the European container board industry,” he said.

The poor performance of the Europe division was partially offset by a better quarter from its Latin American businesses.

Mr McGann said: “During the quarter, we reported significant progress on debt pay down. We continued our programme of monetising non-core assets, sharpened our strategic focus, reduced debt and lowered our overall debt servicing costs.

“Our focus remains on delivering improved financial performance at all points of the industry cycle.”

The company sold the luxury golf and leisure resort, the K Club, and the site of a former paper mill in Clonskeagh to Michael Smurfit and property developer Gerry Gannon for €115m.

It raised a further €9m from the sale of a newsprint mill in the US.

For the six months to end June, Smurfit said sales were 1% lower at €2.12bn and it recorded a loss of €53m compared to a profit of over €16m in the same period a year ago.

Smurfit has been in merger talks with Dutch paper group Kappa for some months, but no update on their progress was given yesterday.