SSCC Smurfit-Stone Container Corp. Common Stock

Packaging Corporation of America (PKG) reported net sales of $629.5 million in the first quarter of 2011, up 14.3% from the year-earlier quarter, and  ahead of the Zacks Consensus Estimate of $628 million. 

Corrugated products shipments improved 3.1% from the year-earlier quarter. Outside sales of containerboard were up 1% from the year-earlier quarter.  Containerboard production increased 5.8% from the year-earlier quarter to 602,000 tons.

Exiting the quarter, the company’s containerboard inventories were down 8,000 tons from the previous year end.

Gross margin improved to 21.1% from 15.7% in the year-ago quarter. Net income came in at $37.4 million or 37 cents per share compared with a net income of $19.2 million or 19 cents in the year-earlier quarter.

Excluding fuel credits and asset disposal charges, net income improved to $39.5 million or 39 cents per share from $12.5 million or 12 cents per share in the year-earlier quarter. The results missed the company’s estimate of 42 cents and the Zacks Consensus Estimate of 41 cents.

The results took a beating due to cost inflation, severe weather issues and two annual maintenance outages. However, the results were positively influenced by increased prices, solid corrugated products volume and superior production at mill.

Management stated that it plans to complete annual maintenance and major capital project work in the second quarter of fiscal 2011. This will result in a production loss of 39,000 tons. For the second quarter of fiscal 2011, the company projects earnings of 35 cents per share, including the impact of production losses and increased cost of chemicals, transportation and energy.

Packaging Corporation is the fifth largest producer of containerboard and corrugated packaging products in the United States. The company competes with International Paper Co. (IP) and Smurfit-Stone Container Corp. (SSCC).

The results of the first quarter of fiscal 2011 were not at all encouraging; shares of Packaging Corporation were down 4.79% and closed at $26.25 in after-hours trading. In regular trading, shares were down 2.13% and closed at $27.57.

 
INTL PAPER (IP): Free Stock Analysis Report
 
PACKAGING CORP (PKG): Free Stock Analysis Report
 
SMURFIT-STN NEW (SSCC): Free Stock Analysis Report
 
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