Paper and packaging group Jefferson Smurfit this morning reported a 26% fall in full year pre-tax profits and said a recovery in the US economy in the second quarter was by no means certain.
Smurfit said its pre-tax profits, after exceptional items, came in at €325 million in 2001. Earnings per share were down 31% to 15.5 cent. The group said today's results represented a good performance in a 'demanding operating environment'.
Net sales for the year were €4,512 million, down 1% on 2000.
The group said both its European and Latin American businesses contributed continued earnings growth. But its US associate, Smurfit Stone Container Corporation, reduced its earnings contribution last year because of a decline in demand for its products.
In its results statement, the company said that demand growth in 2001 again reflected broader economic trends. European corrugated demand grew in most countries during the year but slowed in the second half.
But US corrugated demand suffered its steepest decline (5.4%) since 1975 - its second consecutive year of decline. The company said that while there is no sign of an immediate recovery, the US industry has never suffered more than two years of negative demand growth.
During the year, the company started a series of measures to reduce its cost base. To this end, it divested a laminating operation in the UK and two recycling facilities in the US. A printing facility was also closed in Ireland and the company also sold its US commercial printing operations.
Looking ahead, Smurfit said the global economic recovery was again likely to be driven by the US.
'Through 11 consecutive interest rate cuts, the US Federal Reserve has provided necessary monetary stimulus and defined a clear path towards growth. Against that, however, we believe that the prospect of second quarter growth recovery is best case and not base case,' Smurfit said.
Smurfit shares closed up two cent to €2.48 in Dublin.
