Profits plunge at Jefferson Smurfit: Restructuring may cause job losses at packaging group

JEFFERSON SMURFIT, the Ireland-based international paper packaging group, saw pre-tax profits dive 40 per cent to Ir pounds 95.5m (pounds 97m) in the year to 31 January.

The fall came despite strong growth in Latin America, which accounted for 60 per cent of the group's operating profits of pounds 107.7m. The company blamed poor demand and weak prices in its European and US markets for the slippage, and warned that jobs might be lost as operations were restructured.

Profits plunged in the UK, from pounds 13.6m to pounds 4.7m. Paddy Wright, managing director of Smurfit UK, said: 'We've had a terrible time, as the recession proved longer and deeper than expected.' But he said there were signs of a recovery, with a rise in order books in the past four weeks.

The group's North American operations fell into losses of pounds 1m against profits of pounds 8.2m the previous year.

Ray Curran, chief financial officer, said: 'Normally we're disappointed by a drop like this but in the circumstances it is a very creditable result. We have suffered inevitably as an industry and as a company.'

But profits were also dented by a pounds 29.6m exceptional restructuring charge and a below-the-line extraordinary charge of pounds 19.3m connected to the refinancing of its US joint venture.

The exceptional charge was a provision against rationalisation on the Continent, especially in Spain. 'Spain is a very difficult country for us and we are looking at restructuring the business there,' Mr Curran said.

'We have closed Eppic, our associate company there, but we have yet to decide if any other operations will go, but the provision is there to clear the decks.' He added that at worst 1,000 jobs would be lost. Spanish sales declined 7 per cent to pounds 85m.

Germany also proved problematic for Smurfit, with turnover dropping 11 per cent to pounds 55.5m. Mr Curran said that the gathering recession in Germany had led to over-capacity and falling prices.

He acknowledged that Smurfit was looking at linking up with a partner in Europe to achieve critical mass.

He was more optimistic about prospects for the US. Smurfit intends to float its US associate in the future, probably by way of an international placing and offer.

Mr Curran said: 'We're not convinced the down cycle is over, but with our strong balance sheet and net cash, we're well-positioned to take advantage of the recovery in what is a very cyclical business.'

The dividend rises 5.7 per cent to 3.74p on earnings per share that fell to 11.8p from 24.4p. The shares lost 4p to 243p. Richard Johnson, analyst at Hoare Govett, forecast pre-tax profits of pounds 129m for 1993/94 and earnings per share of 17.8p.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee