Full Year Statement for Year Ended 31 December, 2000.Business Editors DUBLIN Dublin, city, Republic of Ireland Dublin, Irish Baile Átha Cliath, county borough (1991 pop. 915,516), Leinster, capital of the Republic of Ireland, on Dublin Bay at the mouth of the Liffey River. , Ireland--(BUSINESS WIRE)--February 20, 2001 Jefferson Jefferson, uninc. city (1990 pop. 25,782), Fairfax co., N Va. It is a residential suburb of Washington, D.C. Smurfit Group plc today announced preliminary results for the year ended 31 December December: see month. , 2000. Period in review: - 2000 represents JSG's second best year ever in terms of earnings performance - In 1999, JSG made and delivered upon a number of strategic commitments. In 2000, JSG began to benefit from those commitments. - 2000 is, in many respects, a watershed year: proof positive that more rational capacity management will return value Sales: - Third party sales Euro 4,565m +24 % (1999: Euro 3,689m) Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profits: - Before exceptional items Euro 485m +190% (1999: Euro 167m) - After exceptional items Euro 442m +68% (1999: Euro 263m) Earnings per share: - Before exceptional items 25.5c +231% (1999: 7.7c) - After exceptional items 22.4c +100% (1999: 11.2c) Dividend: - Final dividend 4.44c +12% (1999: 3.96c) - Total dividend 6.94c +10% (1999: 6.31c) Period in Review 1999 was a year when we and our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. associate, Smurfit-Stone Container Smurfit-Stone Container Corporation (NASDAQ: SSCC) is an American paperboard and paper-based packaging company based in Chicago, Illinois. It has approximately 38,600 employees. Smurfit-Stone was formed in 1998 as a result of the merger between Jefferson Smurfit Corp. Corporation ('SSCC'), made and delivered upon a number of strategic commitments. 2000 was a year when JSG JSG Joint Study Group (India and Pakistan) JSG Jain Social Group began to benefit from those commitments. JSG reported profit before exceptional items of Euro 485 million and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of 25.5 cent. These results represent our second best year ever in terms of earnings. Industry Environment When packaging demand was growing at a compound annual rate of 5% in the early 1990's, the industry could not cover its cost of capital. Today, containerboard con·tain·er·board n. A corrugated or solid cardboard used to make containers. consumption shows a marginal decline in the industry's leading region: North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Current indications suggest that the broader industry group's earnings grew by 30% for 2000 and, in many instances, exceeded the cost of capital. This is proof positive that more efficient capacity utilisation will return value to the industry's stockholders. Despite the absence of demand growth in the US, the industry's customer base has enjoyed a period of unprecedented price stability. Despite solid demand growth in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). ,
there is industry-wide economic downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. scheduled for a seasonally weak
period. The concept of basing production decisions on demand for your
product today and not tomorrow now appears to have permeated both sides
of the Atlantic. We have consistently maintained that this would not be
an easy journey but it is the only road worth travelling.Current Industry Structure and Capacity Turning now to the current industry structure and the outlook for containerboard capacity growth. Assuming completion of a recently announced transaction, the top five containerboard producers in North America will manage 60% of containerboard capacity against 47% in 1997. Indeed, the current thinking is that further rationalisation Noun 1. rationalisation - (psychiatry) a defense mechanism by which your true motivation is concealed by explaining your actions and feelings in a way that is not threatening rationalization of high cost or inefficient capacity is likely. Industry-wide capacity closure is now 3 million tons. This equates to 8% of North America's containerboard capacity or 3% of global containerboard capacity. Whatever new capacity comes to the marketplace, it will likely come from a base that has now eliminated inefficient capacity. The continued strength of the US dollar means that many US producers have effectively lost their 'low cost producer' status. US producers are, we believe, now residual or marginal suppliers to the rest of the world and have tempered their capacity expansion plans accordingly. Putting some numbers on this. The recent American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Forest and Paper Association ('AF&PA') capacity survey outlined a growth rate of 0.3% for containerboard capacity through to 2003, an average annual growth rate of 0.1%. This should be viewed against a 10 year historical average of 2.6% annual capacity growth. US containerboard capacity increased by 1.8% for 2000. However, SSCC's 130,000 ton York York, former name of Toronto, Canada York, Ont.: see Toronto, Ont., Canada. York, city, England York, city (1991 pop. 123,126) and district, North Yorkshire, N England, at the confluence of the Ouse and Foss rivers. facility and International Paper's 230,000 ton Camden mill (both closed in 2000) are not included in the AF&PA numbers. If included, this would lead to effective net capacity growth of just 0.8% for 2000. In Europe, there is new capacity coming on stream. We currently estimate average annual capacity growth of around 3% through to 2003. Again, this should be seen in the context of a region which continues to grow at a multiple of GDP GDP (guanosine diphosphate): see guanine. . In Asia, two new machines came on stream in 2000, with 600,000 tons of recycled containerboard capacity. A further 800,000 tons is projected to come on stream over the next two years. This is a combination of new capacity and machine rebuilds. US kraftliner is now being effectively replaced in Asia by locally produced testliner. In a global context, projected containerboard capacity growth remains below historic trend-line levels and is in a 1.5% - 2% range for the near to medium term. This is an industry which is more sensitive to changes in supply than to changes in demand. Going forward, our view of the world is that it is increasingly probable that Asia will produce for Asia, Europe for Europe and the US for the US. This implies that global pricing of containerboard will be increasingly impacted by regional fundamentals rather than global tradeflows of kraftliner. The days of kraftliner as the single sourced medium for boxes are increasingly numbered. Shareholder Base and Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. To better reflect the Group's international dimension, we established a dedicated investor relations Investor relations The process by which the corporation communicates with its investors. programme in 1995 to geographically diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our shareholder base. Today, overseas holdings constitute over 50% of JSG's share register, more than double the levels of 1995. North America is the Group's single largest investor group. Continued growth of this component of the share register represents a credible step towards achieving valuation parity parity or space parity, in physics, quantity that refers to the relationship between an object or process and the image that it can produce in a mirror. with our North American peer group. We now have an equity capital market resource consistent with the aspirations aspirations npl → aspiraciones fpl (= ambition); ambición f aspirations npl (= hopes, ambition) → aspirations fpl of a global producer. JSG was recently featured in a survey on European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. corporate governance. This survey, published in Barron's, was completed by an independent French research firm, Proxinvest. Barron's is widely perceived as one of the most authoritative US financial journals. The survey graded individual companies against various statutory and practical criteria of corporate governance. Those criteria included the accessibility of a company's capital and shareholding structure; the quality of Board control; and, the integrity of corporate practices. Of Europe's top 250 listed companies listed company n → compañía cotizable listed company n → société cotée en Bourse listed company list n → (excluding UK companies), JSG ranked number 5. Jefferson Smurfit Group Our objective is to strengthen our position as the world's leading producer of paper-based packaging. In 2000, we completed a series of initiatives consistent with that objective. We acquired Neopac NeoPac Lighting Group (Chinese:新光照明集團), headquartered in Taipei, Taiwan, is a group of companies, comprising NeoPac Opto (Chinese:新強光電)and NeoBulb Lighting (Chinese:新燈源). in Denmark Denmark (dĕn`märk), Dan. Danmark, officially Kingdom of Denmark, kingdom (2005 est. pop. 5,432,000), 16,629 sq mi (43,069 sq km), N Europe. . This is our first direct entry into Denmark and gives us 17% of Danish corrugated cor·ru·gate v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates v.tr. To shape into folds or parallel and alternating ridges and grooves. v.intr. sales. We acquired two companies in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. , FACCA and Cartonex. From a standing start, we are now the number two producer in Argentina with 18% of corrugated sales. We have now established a credible 'fourth' leg to our Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American operations. In the UK, we acquired Norwich Norwich, city, England Norwich (nôr`ĭj, –ĭch), city (1991 pop. 32,664) and district, county seat of Norfolk, E England, on the Wensum River just above its confluence with the Yare. Corrugated (Norcor). This is a corrugated operation particularly focused on value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: grades of containerboard such as microflute. In terms of existing UK operations, we are in the process of completing a series of rationalisation measures to improve the competitiveness of those operations in a country which continues to be affected by the continued strength of sterling and excess capacity. We agreed to acquire the remaining 25% stake in Nettingsdorfer. We also announced the acquisition of a 25% holding, in the form of an agreement to subscribe for new shares, in Leefung-Asco, a Hong-Kong listed company focused on the high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. print and packaging industry in China. We have been looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. the right vehicle for investment in Asia for some time. This investment gives us the opportunity to view the Asian region from the inside - a structure we have successfully used elsewhere throughout the Group's development. Proceeds from this investment will, in the main, be used to expand packaging operations in mainland China. This investment represents a credible first step towards the development of a meaningful Asian presence. It brings with it local expertise and a business culture which is compatible with our own. We have an option to go to a majority holding in Leefung-Asco in 3 years time. We continue to exercise restraint in our capital programmes. Capital expenditure in 1999 was 82% of depreciation. In 2000 it was close to 70%. For the near-term near-term adj. Of, for, or involving a short period of time in the near future. , the intention is to maintain capital expenditure below depreciation levels to reflect a clear commitment to make a return on the invested asset base. The JSG Team It has become something of a cliche to proclaim pro·claim tr.v. pro·claimed, pro·claim·ing, pro·claims 1. To announce officially and publicly; declare. See Synonyms at announce. 2. that 'people are our greatest asset'. Against that, however, there is a recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. theme in each of our best facilities: quality people who understand that it is not just about making boxes; it is about satisfying customers. This business is about customers, people and profitability and not production for its own sake. We see greater returns from investing in people than new machinery. We are committed to the continuous training and development of each of our employees. For 2001 and beyond, it is the employee base who will enable us to continue to position ourselves as a market-led, customer focused company. One that knows and understands its customers, providing certainty, innovation and quality product and service. Outlook The industry is in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of its weakest seasonal period compounded by the affects of a slowing global economy. While the direction of product pricing may be downward, stock prices already reflect recessionary levels. We believe that there is sufficient evidence, in the form of efficient capacity utilisation, to suggest that earnings will not decline to the extent reflected by current market values. As committed investors in and managers of the business, it is with a reasonable degree of optimism that we look at the emerging industry landscape. Adoption of the principles of efficient capacity management has clearly demonstrated the potential to deliver the type of earnings the industry's stockholders are entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to expect. Operations Review Third party sales of Euro 4.57 billion reflect a 24% increase on 1999 levels. Profits, before interest, exceptional items and tax increased 71% to Euro 766 million against Euro 448 million in 1999. Overview: US Demand in the US declined 0.5% on a per day basis (or declined 0.9% on an absolute basis) in 2000. Against that background, however, the US experienced one of its longest periods, if not the longest period, of product price stability. Kraftliner prices, at US$475 a ton, were unchanged for 10 consecutive months. Input costs, in the form of OCC OCC See: Options Clearing Corporation OCC See Options Clearing Corporation (OCC). prices, continued to decline in the second half and are now trading at an average of US$40 to US$45 a ton. Extensive economic downtime has clear implications for the amount of OCC being used in the system and consequently its price level. Industry-wide downtime for 2000 is estimated at 3 million tons, approximately 8% of US annual capacity. Taking downtime when kraftliner is transacting at levels which produce economic returns is without precedent for North American producers. Operating rates Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. for 2000 were 91%. This capacity utilisation figure reflects extensive economic downtime and the fact that machines generally ran at less than their notional no·tion·al adj. 1. Of, containing, or being a notion; mental or imaginary. 2. Speculative or theoretical. 3. design capacity. Overview: Europe Europe enjoyed solid demand growth in 2000. Corrugated demand, within our own system, grew 2%. Including recently acquired conversion capacity, demand growth shows a 10% increase. Kraftliner and testliner prices remain reasonably stable in Europe, transacting at an industry average of Euro 515 and Euro 450 a tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. respectively. Generally better demand and less extensive economic downtime has resulted in more stable input costs. OCC is recently transacting at an average cost of Euro 50 to Euro 70 tonne across Europe although the near-term bias is downward. As the largest producer of kraftliner in Europe, we are a direct beneficiary beneficiary Person or entity (e.g., a charity or estate) that receives a benefit from something (e.g., a trust, life-insurance policy, or contract). A primary beneficiary receives proceeds from a trust or insurance policy before any other. of the continued strength of the dollar. US tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. is, today, quite simply uncompetitive in a European context. Almost all of the major European producers have announced economic downtime for the seasonally slow December/January period. We announced 50,000 tonnes of downtime, approximately 12% of our annualised capacity. Industry downtime, for the same period, is, in aggregate, 150,000 tonnes or 5% of annualised capacity and, again, reflects the concept of producing to demand. Overview: Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. Latin American demand continued to recover with 10% corrugated demand growth in 2000 and an improved pricing environment. While we experienced improved volumes in each country, economic conditions differed markedly. The Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum economy continued to grow, however, Colombia Colombia (kəlŭm`bēə, Span. kōlōm`byä), officially Republic of Colombia, republic (2005 est. pop. 42,954,000), 439,735 sq mi (1,138,914 sq km), NW South America. Bogotá is the capital and largest city. , Argentina and Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. , continued to suffer from recession. Venezuela, in particular, continues to be very difficult. Regional Review: Europe Third party sales for the Group's European operations were Euro 3.05billion, an increase of 14% on Euro 2.67billion in 1999. Profit before interest, exceptional items and tax increased 53% to Euro 279 million in 2000 against Euro 183 million in 1999. Our European operations benefited from positive demand growth during 2000. Demand growth was skewed skewed curve of a usually unimodal distribution with one tail drawn out more than the other and the median will lie above or below the mean. skewed Epidemiology adjective Referring to an asymmetrical distribution of a population or of data towards the first half of the year when there was price recovery in both the virgin and recycled grades. Recycled prices were supported by rising waste prices which peaked in May. Corrugated prices did not fully reflect paper price increases at the half year and recovered slowly during the second half. The pace of European demand growth also moderated in the second half of the year. Waste paper prices in Europe continued to decline through the second half of the year and are putting downward pressure on pricing. Our kraftliner mills, Facture fac·ture n. The manner in which something, especially a work of art, is made: "the gummy surfaces, spectral smudges and woozy contours that . . . and Nettingsdorfer, show strong improvements in profitability year-on-year. JSG's kraftliner volumes were adversely impacted by extended maintenance downtime in Facture. Volumes in Nettingsdorfer increased 1%, however, volumes in Facture declined by 5%. Strong year-on-year profit performance reflects improved European pricing for kraftliner in 2000. Current industry pricing remains reasonably stable at Euro 515 to Euro 530 per tonne. The performance of our recycled mills was mixed, impacted by volatile waste prices and extended maintenance downtime. Volumes, in aggregate, declined 3% on 1999 levels. Industry average recycled prices recovered by over Euro 100 per tonne on 1999 levels and are currently trading at an average of Euro 450 per tonne. Waste prices, which rose dramatically in the first half peaked at an average of Euro 140 per tonne in May and are now trading at Euro 70 to Euro 80 per tonne. Corrugated volumes in Europe increased 2% year-on-year. Including acquisitions volumes grew 9% year-on-year. Corrugated volumes show positive year-on-year growth in France, Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , Portugal Portugal (pôr`chəgəl), officially Portuguese Republic, republic (2005 est. pop. 10,566,000), 35,553 sq mi (92,082 sq km), SW Europe, on the western side of the Iberian Peninsula and including the Madeira Islands and the Azores in the and Austria Austria (ô`strēə), Ger. Österreich [eastern march], officially Republic of Austria, federal republic (2005 est. pop. 8,185,000), 32,374 sq mi (83,849 sq km), central Europe. . Volumes declined in Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. , reflecting the disposal of our Foggia Foggia (fôd`jä), city (1991 pop. 156,268), capital of Foggia prov., in Apulia, S Italy. It is a transportation and industrial center and the main wheat market of S Italy. It is a highly diversified secondary industrial center. facility. Volumes declined in Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. and the UK due to weak demand in the corrugated business. Corrugated price recovery was a key focus in the second half, where there was a lag in recovering paper price increases. Our French corrugated operations, in particular, suffered a slow recovery of paper price increases. Paper price increases were effectively fully recovered by October October: see month. . The corrugated division in the UK continued to suffer from a tough manufacturing environment. Volumes, excluding acquisitions, declined year-on-year. We have, however, recently completed a series of rationalisation measures to re-structure our existing UK operations and they are now in a substantially better position to take advantage of any improvement in corrugated demand. Sack volumes grew 8% year-on-year. Spain and Italy showed strong volume growth, while France was flat year-on-year. Volumes in Ireland declined due, in part, to a weaker agri-business sector. Volumes in graphic board were up 9%. Graphic board, like containerboard, experienced increases in both waste and paper prices. The operations, however, also benefited from the reduction in waste prices in the second half. Our Bag-in-Box For the BIB bibliography database format, see . In packaging, a Bag-In-Box or BIB is a type of container invented by William R. Scholle in 1955 for the storage and transportation of liquids. It consists of a strong plastic bag seated inside a corrugated fiberboard box. division had an excellent year. Volumes were up 37% on 1999 levels. This continues to be a niche business for the Group with good growth prospects. Associates Munksjo reported operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of Euro 80 million in 2000, up almost Euro 45 million on 1999. This improvement was driven by favourable pulp and Decor paper businesses. JSG's share of pre-tax profits was Euro 24.7 million. Following a share buy back, our stake in Papelera Navarra Navarra conventional Navarre Autonomous community (pop., 2006 est.: 601,874) and province, northern Spain. Established in 1982, it has an area of 4,012 sq mi (10,391 sq km) and is bordered by France. , a Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. associate, increased from 40.6% to 42.8%. JSG's share of pre-tax profits was Euro 2.5 million. Regional Review: Latin America Third party sales for the Group's Latin American operations were Euro 783 million, an increase of 31% on Euro 596 million in 1999. Profit before interest, exceptional items and tax increased 46% to Euro 94 million in 2000, against Euro 64 million in 1999. The Mexican economy continued to grow in 2000 and containerboard and corrugated volumes increased year-on-year. Corrugated prices essentially reflect US pricing. There are signs that the Mexican economy is slowing. This is, for the most part, a reflection of the economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the US. Profitability was impacted by higher energy, waste and paper prices. Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. continues to be our strongest performer in Latin America. Our Colombian operations performed well during 2000. Containerboard and corrugated volume growth was largely export driven reflecting an economic environment with low inflation and high devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. . Profitability was also driven by our ongoing cost take out programme. Our printing and writing operation also had a good year reflecting both price and volume recovery. Venezuela continues to suffer from difficult business conditions. Despite containerboard and corrugated volume growth, corrugated prices declined significantly on 1999 levels. Performance during the year was also adversely impacted by an overvalued Overvalued A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a currency. Argentina was a focus for growth in 2000 with two acquisitions in the second half: FACCA and Cartonex. As a consequence, our corrugated volumes grew significantly. We have now established ourselves as a significant player in Argentina and are in a strong position to take advantage of any improvement in the economy. Regional Overview: North America Third party sales for the Group's North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. were Euro 733 million, an increase of 75% on Euro 420 million in 1999. Profit before interest, exceptional items, tax and minority interests increased 96% to Euro 393 million in 2000, against Euro 201 million in 1999. Subsidiaries The Group's subsidiaries in North America are Smurfit Packaging Corporation (SPC 1. (business) SPC - Statistical Process Control. Something to do with quality management. 2. (body) SPC - Software Productivity Centre. 3. (company) SPC - Software Publishing Corporation. 4. ) and Smurfit MBI MBI Management Buy-In MBI Moody Bible Institute MBI Mathematical Biosciences Institute MBI Modular Building Institute MBI Mechanical Breakdown Insurance MBI Molecular Biology Institute MBI Maslach Burnout Inventory (psychometrics) . SPC, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , comprises the Pomona newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been mill, two recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. plants in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and a printing/voting systems division. Smurfit MBI is a 50% owned and controlled Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. corrugated company. The SPC operations had a very good year. Growth in profitability at our Pomona newsprint mill reflects the improvement in newsprint demand. Pricing and volumes increased on 1999 levels. While rising old newsprint prices had an impact on Pomona's operating performance, it also positively contributed to the performance of our reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. operations. Profitability at our Sequoia sequoia (sĭkwoi`ə), name for the redwood (Sequoia sempervirens) and for the big tree, or giant sequoia (Sequoiadendron giganteum), both huge, coniferous evergreen trees of the bald cypress family, and for extinct related species. commercial and election printing operations improved year-on-year due to better than expected results from the election business and the ongoing benefits of the rationalisation programme undertaken at the end of 1999. The voting equipment division also reported improved profitability following the US Presidential election. Smurfit MBI improved profitability year-on-year reflecting volume growth and price recovery. Paper price increases were fully recovered in the corrugated prices within the period. Associates: SSCC SSCC Serial Shipping Container Code (EAN barcoding) SSCC Sacred Hearts of Jesus and Mary (religious order) SSCC Space Station Control Center SSCC Sulphide Stress Corrosion Cracking Third party sales for SSCC in 2000 were US$ 8.8 billion, an 18% increase on 1999 reflecting the impact of the St Laurent acquisition. Income from operations was US$ 933 million, up from US$ 423 million in 1999. Sales were adversely impacted by declining demand and extensive economic downtime. Profitability was driven by improved pricing, improved mill productivity, and the contribution from St Laurent, offset by higher waste and energy prices in the period. JSG's share of SSCC's pre-tax profits was Euro 185 million. Industry-wide downtime for 2000 was of the order of 3 million tons, approximately 8% of US annual capacity. Taking downtime when kraftliner is transacting at levels which produce economic returns is without precedent for North American producers. SSCC took 713,000 tons of economic downtime in 2000. While actions taken to balance supply with existing demand have clearly impacted earnings for SSCC and, by logical extension, JSG, the cost of a US$50/ton reduction on linerboard lin·er·board n. A type of paperboard used in making corrugated cartons. would be a multiple of the earnings foregone fore·gone v. Past participle of forego1. adj. Having gone before; previous. Usage Note: The word foregone has recently developed a new meaning as a truncation of the phrase . Financial Review Profit before taxation JSG reported profit before exceptional items of Euro 485 million and EPS of 25.5 cent. These results represent our second best ever year in terms of earnings. Including exceptional items, JSG reported 2000 pre-tax profit of Euro 442 million and EPS of 22.4 cent. This includes net exceptional costs of approximately Euro 43 million. These costs primarily relate to plant closures and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs in our UK operations and our share of similar costs arising in SSCC. Interest charges in total are broadly unchanged from 1999. For the consolidated Group, an increased charge reflects a higher average level of debt in 2000, which, for the most part, is a result of currency given the relative weakness of the euro. The weak euro also diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. the benefit of a lower interest charge in SSCC. As a result, there was only a modest decrease in our share of associates' net interest. Taxation The taxation charge of Euro 169 million represents a rate of 38%. This is a significant reduction on the comparable 48% in 1999. Excluding exceptional items, the rate for 2000 was 37% as compared to 41% in 1999. The variation in the tax rates reflects the different geographic spread of profits with their attendant ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. different tax rates. Similarly, limited tax relief was available on the reorganisation Noun 1. reorganisation - the imposition of a new organization; organizing differently (often involving extensive and drastic changes); "a committee was appointed to oversee the reorganization of the curriculum"; "top officials were forced out in the cabinet and restructuring costs. In addition, a number of specific factors impacted the tax charge particularly in 1999 and to a lesser extent in 2000. Minimum tax charges arise in certain countries irrespective of irrespective of prep. Without consideration of; regardless of. irrespective of preposition despite the profits generated, giving rise to higher effective tax rates when profits are reduced or when full tax relief is not available on losses sustained. Earnings per Share and Dividends EPS, before exceptional items, increased more than 3 fold from 7.7 cent to 25.5 cent in 2000. Including exceptional items, EPS doubled from 11.2 cent to 22.4 cent. The increase reflects the overall improved profitability in 2000 and the impact of the lower overall tax rate partly offset by an increase in minority interests. We have a continuing commitment to increase shareholder returns and maintain a policy of sustained dividend growth within the constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. of a cyclical industry Cyclical Industry A term describing an industry that is sensitive to the business cycle and price changes. Many cyclical industries produce durable goods such as raw materials and heavy equipment. . Accordingly, the Board has declared a final dividend of 4.44 cent for 2000, which, subject to approval, will be paid on 11 May, 2001 to shareholders on the record on 17 April, 2001. The proposed final dividend reflects a 12% increase on the comparable dividend paid in 2000. We are the only company, within the paper and forest products sector, to sustain a dividend increase each year since 1985. Together with the interim dividend, paid in December 2000, total dividends for 2000, at 6.94 cent, represent a 10% increase on the comparable figure for 1999. The dividends charged in 2000 represent a return to the normal pattern of an interim and a final following several years when the payment pattern was altered to benefit shareholders as tax credits were phased out. The charge in 1999 relates to three dividends as a first interim dividend was paid in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. a final dividend for 1998. Cash Flow Summary cash flows for 2000 and 1999 are set out in the following table, which is in a more user friendly format than the FRS FRS abbr. Fellow of the Royal Society FRS, n “flexed rotated side-bent,” an osteopathic abbreviation used to describe vertebral position in cases of spinal dysfunction. 1 cash flow included later in this release.
Summary Cash Flows 2000 1999
Euro Million Euro Million
------------ ------------
Profit before taxation
- subsidiaries only 242 100
Exceptional items - 32
Depreciation and amortisation 225 210
Working capital change (81) (57)
Capital expenditure (152) (171)
Sales of fixed assets 24 43
Tax paid (55) (73)
Associates and finance company dividends 9 15
Other (9) 5
------- -------
Free cash flow 203 104
Investments (93) (23)
Sale of businesses and investments 10 84
Share issues 1 1
Dividends (87) (82)
------- -------
Net cash inflow 34 84
Debt acquired (40) (51)
Currency translation adjustments (63) (143)
------- -------
Increase in net borrowing (69) (110)
======= =======
Free cash flow (cent per share) 18.7 9.6
======= =======
Profit before taxation from subsidiaries for the year amounted to Euro 242 million, representing a dramatic improvement on 1999's Euro 100 million. The increased level of cash generation by our subsidiaries results mainly from the increased overall profitability of our European and wholly owned U.S. operations. Profits from our Latin American operations are also considerably higher than 1999 although this improvement is enhanced by the relative weakness of the euro. Depreciation, at Euro 225 million, shows a moderate increase year-on-year due to currency effects and acquisitions. As in 1999, capital expenditure has been maintained at a level below our depreciation stream with the difference giving us a net inflow in·flow n. 1. The act or process of flowing in or into: an inflow of water; an inflow of information. 2. of approximately Euro 73 million, an improvement of Euro 34 million on the corresponding figure achieved in 1999. To put this in context we reduced capital expenditure from 82% of depreciation in 1999 to close to 70% in 2000. Tax payments, at Euro 55 million are Euro 18 million lower than in 1999, when several non-recurring items arose, including the payment of the tax in respect of the gain on the sale in late 1998 of the Fernandina PM-2 linerboard machine. The working capital outflow Capital outflow is an economic term describing capital flowing out of (or leaving) a particular economy. Outflowing capital can be caused by any number of economic or political reasons but can often originate from instability in either sphere. in 2000 generally reflects the increased level of sales revenue and is largely a function of the better pricing environment than in the previous year. Free cash flow of Euro 203 million in 2000 is almost double the corresponding figure for 1999. Free cash flow per share Free Cash Flow per Share A measure of a company's financial flexibility. It is calculated as net income plus all non-cash expenses less dividends and capital expenditures. The total is then divided by the number of shares outstanding. shows a similar increase from 9.6 cent in 1999 to 18.7 cent in 2000. This improvement is offset, however, by the absence of the proceeds from disposals, which contributed greatly to cash flow in 1999, and by a higher level of investment activity in 2000. In 2000 our main investments included Neopac, our first acquisition in Denmark and the expansion of our operations in Argentina with the purchase of FACCA and Cartonex. We also extended our presence in the UK through the acquisition of Norcor. After investments and dividends our cash surplus was Euro 34 million. This surplus is more than offset by currency and debt acquired, mainly in relation to Norcor and Cartonex, resulting in an overall increase in net borrowing of Euro 69 million in 2000. Borrowings denominated in foreign currencies increased by Euro 63 million principally as a result of the relative weakness of the euro against the US dollar. The US dollar is the most important foreign currency for the Group given the scale of our assets in the Americas. Although the Euro strengthened somewhat against the US dollar in the latter part of 2000, as the U.S. economy weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. , its value declined by
over 7% in the year from an opening rate of approximately US$ 1 to a
closing rate of 93 US cents. The currency loss on the U.S. dollar was
offset slightly by a gain on Sterling, against which the euro
strengthened marginally.Balance sheet Both our assets and liabilities have increased during 2000 largely due to currency movements and acquisition activity. This is seen, for example, by an increase in tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. despite a level of capital expenditure below the depreciation stream. Working capital is similarly affected. Intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. represent goodwill booked on acquisitions and the increase in 2000 reflects the goodwill arising on new investments in Denmark, Argentina, the United Kingdom and the agreement to acquire the remaining 25% minority interest in Nettingsdorfer. Group Shareholders' Funds have increased by Euro 241million with retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. contributing Euro 167 million and Euro 73 million coming from currency adjustments. With the overall increase in the value of the Group's balance sheet, Net Assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. (Group Shareholders' Funds) per Ordinary Share equates to Euro 2.31 at December 2000 as compared to Euro 2.10 at December 1999. Treasury & Borrowing Group net debt at 31 December 2000 was Euro 1,167 million, (total debt of Euro 1,594 million less cash Euro 427 million). This represents 46.6% of Group Shareholders' Funds as compared to 48.5% at December 1999. At the end of 2000 41% our total debt is at fixed interest rates. Of our total debt, 58% is provided by institutional lenders and 42% by Banks. On a net debt basis, 80% is provided by institutional lenders. The average maturity profile of our debt is approximately 7 years. Committed borrowing facilities were Euro 2 billion. The weighted average interest rate on total debt was 7.24%. Interest expense for the twelve months to December 2000 was covered 3.63 times by consolidated operating profit, excluding associates. Long and medium term funding requirements are met through our Guaranteed Notes and Debentures due in 2005 and 2025 respectively, our Guaranteed Senior Notes due between 2003 and 2008 and from committed bank facilities. Short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. requirements are met by drawing on committed and uncommitted bank facilities. We continue to focus on our purchasing spend and purchasing practices to contain costs and maximise logistical lo·gis·tic also lo·gis·ti·cal adj. 1. Of or relating to symbolic logic. 2. Of or relating to logistics. [Medieval Latin logisticus, of calculation efficiency.
Summary Group Profit and Loss Account
For the year ended 31 December 2000
2000 1999
Euro 000 Euro 000
Unaudited Audited
---------- ----------
Turnover - continuing 4,565,244 3,688,595
Cost of sales 3,336,671 2,728,050
Impairment of fixed assets - 23,235
--------- ---------
Gross profit 1,228,573 937,310
Net operating expenses 866,103 734,897
Reorganisation and restructuring costs 20,890 43,174
--------- ---------
Operating profit subsidiaries - continuing 341,580 159,239
Share of associates' operating profit 403,934 222,285
Share of associates' restructuring costs (24,894) (19,621)
--------- ---------
Total operating profit 720,620 361,903
--------- ---------
Profit on sale of
operations subsidiaries - continuing - 34,529
Share of associates'
profit on sale of operations 3,105 148,060
Group net interest (99,859) (93,652)
Share of associates' net interest (181,567) (187,528)
--------- ---------
Total net interest (281,426) (281,180)
--------- ---------
Profit before taxation 442,299 263,312
Taxation
Group 89,679 59,538
Share of associates 79,322 65,981
--------- ---------
169,001 125,519
--------- ---------
Profit after taxation 273,298 137,793
Equity minority interests 30,816 16,187
--------- ---------
Profit for the financial year 242,482 121,606
--------- ---------
Dividends 75,204 109,116
--------- ---------
Retained profits Euro 167,278 Euro 12,490
------------ -----------
Earnings per ordinary share - Basic 22.4c 11.2c
--------- ---------
Earnings per ordinary
share before exceptional items - Basic 25.5c 7.7c
--------- ---------
Earnings per ordinary share - Diluted 22.3c 11.2c
--------- ---------
Earnings per ordinary
share before exceptional items - Diluted 25.4c 7.6c
--------- ---------
Jefferson Smurfit Group plc
Segmental Analyses
Sales - third party
2000 1999
Euro 000 % Euro 000 %
--------- ----- --------- -----
Europe 3,048,654 66.7 2,672,095 72.4
United States and Canada 733,486 16.1 420,070 11.4
Latin America 783,104 17.2 596,430 16.2
--------- ----- --------- -----
Euro 4,565,244 100.0 Euro 3,688,595 100.0
-------------- ----- -------------- -----
Associates
third party sales Euro 10,233,128 Euro 7,217,036
--------------- ---------------
Share of associates Euro 3,044,020 Euro 2,381,671
--------------- ---------------
Profit before
interest, exceptional
items and taxation
2000 1999
Euro 000 % Euro 000 %
-------- ----- -------- -----
Europe 279,154 36.4 183,040 40.9
United States and Canada 393,216 51.3 200,608 44.8
Latin America 94,034 12.3 64,285 14.3
------- ---- ------- ----
Profit before interest,
exceptional items and taxation 766,404 100.0 447,933 100.0
------- ----- ------- -----
Group net interest (99,859) (93,652)
Share of associates'
net interest (181,567) (187,528)
-------- --------
Profit before exceptional items 484,978 166,753
Exceptional items:
Profit on sale of operations - 34,529
Impairment of fixed assets - (23,235)
Reorganisation and
restructuring costs (20,890) (43,174)
Share of
associates' exceptional items (21,789) 128,439
-------- -------
Profit before taxation Euro 442,299 Euro 263,312
------------ ------------
Statement of Total Recognised Gains and Losses
2000 1999
Euro 000 Euro 000
Unaudited Audited
--------- --------
Profit for the year attributable
to ordinary shareholders
- Group 132,826 41,916
- Associates 109,656 79,690
------- -------
242,482 121,606
------- -------
Translation adjustments on
foreign currency net investments
- Group 72,460 154,641
------- -------
Total recognised gains and losses
relating to the financial year
- Group 205,286 196,557
- Associates 109,656 79,690
------- -------
Euro 314,942 Euro 276,247
Jefferson Smurfit Group plc
Summary Group Balance Sheet
as at 31 December 2000
2000 1999
Euro 000 Euro 000
Unaudited Audited
--------- --------
Assets Employed
Fixed Assets 146,778 96,447
Tangible assets 2,138,827 2,085,678
Financial assets 1,605,515 1,411,007
--------- ---------
3,891,120 3,593,132
--------- ---------
Current Assets
Stocks 437,444 350,486
Debtors 1,145,346 989,397
Cash at bank and in hand 427,092 457,408
--------- ---------
2,009,882 1,797,291
Creditors
(amounts falling due within one year) 1,614,268 1,491,248
--------- ---------
Net current assets 395,614 306,043
--------- ---------
Total assets
less current liabilities Euro 4,286,734 Euro 3,899,175
-------------- --------------
Financed by
Creditors (amounts falling due
after more than one year) 1,337,515 1,205,363
Government grants 9,960 10,022
Provisions for liabilities and charges 264,579 229,456
--------- ---------
1,612,054 1,444,841
--------- ---------
Capital and Reserves
Called up share capital 332,589 332,258
Share premium 100,339 99,217
Revaluation reserve 10,579 10,579
Other reserves 247,421 174,961
Profit and loss account 1,814,247 1,646,969
--------- ---------
Group shareholders'
funds (equity interests) 2,505,175 2,263,984
Minority interests (equity interests) 169,505 190,350
--------- ---------
2,674,680 2,454,334
-------------- --------------
Euro 4,286,734 Euro 3,899,175
-------------- --------------
This preliminary statement was approved by the board on 19
February 2001. It has been prepared on the basis of the accounting
policies set out in the Annual Report for the year ended 31 December
1999.
The above summarised consolidated balance sheet and the foregoing
consolidated profit and loss account do not constitute full accounts
and except where indicated are unaudited. Full accounts for the year
ended 31 December 1999, which received an unqualified audit report,
have been filed with the Irish Registrar of Companies and full
accounts for the year ended 31 December 2000 will be filed in due
course.
Jefferson Smurfit Group plc
Summary Group Cash Flow Statement
For the year ended 31 December 2000
2000 1999
Euro 000 Euro 000
Unaudited Audited
--------- -------
Net cash flow from
operating activities 482,298 392,417
-------- -------
Dividends received from associates 8,718 14,905
-------- -------
Returns on investments
and servicing of finance
Interest received 23,814 29,539
Interest paid (123,105) (120,822)
Interest paid on finance leases (2,454) (2,937)
-------- -------
(101,745) (94,220)
-------- -------
Taxation
Irish corporation tax paid (13,482) (7,948)
Overseas tax paid (41,625) (64,959)
-------- -------
(55,107) (72,907)
-------- -------
Capital expenditure
and financial investment
Purchase of tangible fixed assets (147,629) (171,088)
Less new finance leases 713 3,492
-------- -------
(146,916) (167,596)
Capital grants received 2,963 2,211
Purchase of other investments (3,008) (9,474)
Sale of fixed assets 30,634 49,503
-------- -------
(116,327) (125,356)
-------- -------
Acquisitions and disposals
Purchase of subsidiaries and minorities(103,998) (11,239)
Business disposals 2,650 77,620
Investments in and
advances to associates (7,719) (5,700)
-------- -------
(109,067) 60,681
-------- -------
Equity dividends paid (86,931) (81,800)
-------- -------
Cash inflow before use of
liquid resources and financing 21,839 93,720
-------- -------
Management of liquid resources 23,074 595,439
-------- -------
Financing
Issue of shares including minorities 1,453 778
(Decrease) in term debt (11,029) (677,622)
Capital elements of
finance leases repaid (10,380) (11,748)
-------- -------
(19,956) (688,592)
-------- -------
Increase in cash Euro 24,957 Euro 567
----------- --------
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