Smurfit profits flat in 'demanding' environment

Irish packaging firm Jefferson Smurfit has reported flat profits, but says its half-year figures are a creditable performance in a "demanding operating environment".

The group, which makes folding cartons, paper sacks and corrugated containers, says pre-tax profits for the six months to June 30 came in at £120m.

Smurfit says the pace of growth in demand moderated worldwide throughout the first-half, with a marked slowdown in the second quarter.

"Like everyone else, we do not know whether economic conditions will get worse before they get better," the Dublin-based company says.

But the group, which operates in 30 countries worldwide, says it has taken heart from the US Federal Reserve's "unprecedented willingness to provide the necessary stimulus for economic recovery" by its moves to cut interest rates.

Smurfit says its European businesses have seen steady growth in demand, with sales up 5% and profits up 44%.

It says Latin America performed "creditably against a demanding political and economic backdrop", reporting sales up 14% and profits up 34%.

However, sales in North America fell by 4%, while profits - including its share of operating profits at US associated firm Smurfit-Stone Container Corporation - were down 38%.

Total group turnover was £1.6bn, up 5% on the same period in 2000. Smurfit says it's aiming to reduce operating costs in the near term, while continuing to sharpen its product focus through the disposal of non-core assets.

It says it will also exit "consistently unprofitable, inefficient operations which are a cash drain".