Smurfit-Stone sees restructuring ending soon
NEW YORK (Reuters) - Smurfit-Stone Container Corp SSCC.O, one of the largest North American containerboard makers, expects its restructuring process to end during the first half of 2009, President Steven Klinger said on Thursday.
"We'll have some lingering effects with one or two plant (closures) in the second-quarter of next year, but most of it will be done by the end of March," Klinger told the Reuters Paper Summit.
The company has closed more than 30 box plants and cut about 5,700 jobs since it announced its restructuring program in 2005. It has also closed a few of its containerboard mills.
Klinger said that a weak U.S. dollar and strong exports had helped keep the company's mills operating normally, even as the company has been reducing its box plant capacity. The box plants are likely to begin to consume more of the company's containerboard capacity, once the realignment is complete.
Smurfit-Stone was until recently the largest North American containerboard maker, but it has just been overtaken by International Paper (IP.N), which earlier this month completed its $6 billion acquisition of Weyerhaeuser Co's (WY.N) packaging business assets.
Containerboard is a type of thick paper that is used to make corrugated boxes. Containerboard is manufactured at mills, which supply box plants that convert containerboard to corrugated boxes.
The company had about 140 box plants when it began its restructuring process and will end up with about 100 plants when the process ends next year, Klinger said.
Smurfit-Stone and its counterparts have implemented a $55 per ton price increase in containerboard prices and the companies are currently in the process of implementing a similar increase on box products.
"We are very focused on the $55 and the subsequent increase on the box side. If inventories remain at levels that they are at; if people are still experiencing cost inflation and if there's some sort of bump in demand -- then obviously there will be additional price restoration," said Klinger in a telephone interview.
Longbow Research in a recent survey of the industry noted that a majority of respondents believe that the current box price increases will not fully offset the higher costs and expect an additional price increase in 2008.
(Editing by Phil Berlowitz)
