Jefferson Smurfit Corporation (JSC), the US company in which the Jefferson Smurfit Group has a 46.5 per cent stake, wants to take advantage of consolidation opportunities in the US container board industry, a spokesman said yesterday.

But, as the company reported pre-tax profits before extraordinary items of $21 million for the first quarter of 1998, he admitted that a long-awaited deal is not imminent. The latest result compares with a loss of $8 million for the first three months of 1997.

It reflects a jump in trading income to $71 million from $39 million, with an increase in sales to $844 million from $778 million, and a marginal rise in net interest expenses to $50 million from $47 million. The JSC share price dropped back by 25 cents to $18.75 after the results were announced. But after tax and an extraordinary item, the result was a loss of $2 million, down from a loss of $7 million in the corresponding quarter of 1997. This loss reflected a higher tax bill, at $10 million, and a extraordinary expense of $13 million caused by the early repayment of a bank debt. The early repayment is expected to knock some $9 million off the company's annual interest bill.

Earnings per share at $0.10 before the extraordinary, up from a loss of $0.60, were below the consensus market expectation of $0.12. After the extraordinary item, the outcome was a loss per share of $0.02. The difference between the outcome and market expectations was attributed to higher wood costs because of wet weather and maintenance and restart costs associated with downtime taken in Florida.

The US paper and packaging sector has been battered by weak product prices despite good demand. But JSC expects product prices to improve during the year as long as stock levels continue to fall in the current quarter.

Share prices of US paper and packaging groups rose by 15 per cent earlier this week, but weakened back again on Wednesday after lower-than-expected falls in inventory - stocks of paper held by the companies - and lower-than-expected corrugated box shipments were reported for March.

The industry inventory figures, which showed a 1.7 per cent fall in stock levels, were well below the expected fall of more than five per cent. This means that the $50 per ton price rise that the producers plan to implement from May 1st is now less likely to stick.

However, the JSC spokesman said the fall in stock levels reflected the fact that all the downtime announced for March was not taken then. "It is only one month's figures," he said. Significant downtime is expected to be taken this month, he added. JSC is taking 15,000 tons out of production.

Significant falls in stock levels are critical to achieving the increases in product prices that immediately feed into profits for the paper companies because of their high fixed-cost bases. The likelihood of a price increase in the current quarter will depend on the industry stocks and shipments figures for April.

In a generally upbeat comment, JSC president and chief executive Mr Richard Graham said the results reflected improved market conditions and prices. Newsprint prices were 19 per cent ahead of the corresponding period last year while containboard prices were 17 per cent ahead.

Good domestic demand and limited capacity additions "have been driving a steady increase in prices for the past twelve months", he said. On the outlook, he said JSC would benefit from lower fibre and interest costs but additional mill downtime in April will have a negative impact on the second quarter results.

A JSC spokesman was reluctant to comment on the long-awaited restructuring of the company to reduce costs, concentrate on core products and find an industry partner to replace Morgan Stanley.