A positive trading statement by JS Corporation for the current year failed to prevent Jefferson Smurfit shares falling sharply on the Dublin market yesterday. The shares closed 9p lower on 200p.
JS Corp shares were also weaker on the Nasdaq market in New York after the announcement by the Smurfit associate of a virtual break-even position for 1997. JS Corp is 46.5 per cent-owned by Jefferson Smurfit Group and the shares were trading at $15 1/4 in New York last night, well below last October's $21 high.
The results from JS Corp were marginally worse than analysts had expected, with full-year profits of just $1 million (£719,000) compared to $117 million profits in 1996. Earnings per share for the year of one cent were below average forecasts of three cents with sales down from $3.4 billion to $3.2 billion.
Most attention, however, was centred on the statement on current year trading, and here - in line with the rest of the US packaging industry - JS Corp is taking a much more optimistic view on the prospects for 1998 than that being adopted on Wall Street.
Smurfit finance director Mr Ray Curran said: "There seems to be a disconnect between the industry and Wall Street on the prospects for the year. The industry looks at its order books and sees a very good demand scenario and is quite optimistic. Wall Street analysts are looking at the potential impact of Asia on the US economy and are factoring in a perceived reduction in US GDP of about 1 per cent because of lower demand for American products from Asia.
"Time will tell who is calling it right. But we see significant demand for our products and the industry believes that the next price movement will be upwards," said Mr Curran.
Already, JS Corp and the rest of the industry have managed to put through two $50 a ton price increases for linerboard to bring the price back above $400 a ton, compared to $370 at the start of 1997.
The results do show a substantial improvement in the group's fortunes in the second half of 1997. Chief executive Mr Richard Graham attributed the poor fourth-quarter figures to once-off factors, including unscheduled downtime at containerboard mills. "Our markets during the fourth quarter showed clear signs of an upturn. Average prices for major products such as containerboard, containers, boxboard and newsprint were at or above the levels of the fourth quarter of 1996. Demand for paper-based packaging was strong. We increased shipments of containers, folding cartons and boxboard compared to the same quarter of last year, while successfully implementing price increases," said Mr Graham.
