DOW JONES NEWSWIRES
Rock-Tenn Co.'s (RKT) fiscal second-quarter earnings rose 13% as
the packaging-products company booked higher shipments and selling
prices.
Shares were down 1.7% at $70.33 after hours as the bottom line
missed analyst estimates. Through the close, the stock has risen
33% so far this year.
Rock-Tenn's bottom line has previously struggled in
year-over-year comparisons because of the benefits of alternative
fuel tax credits in the year-ago periods. The company uses biomass
from paper milling to produce liquid fuel. But the company also has
been reporting rising demand and price increases.
In January, Rock-Tenn, which makes packaging for food and
consumer products, agreed to purchase Smurfit-Stone Container Corp.
(SSCC) for $3.5 billion in cash and stock. The deal is expected to
close in the current quarter, which would place it within one year
of Smurfit's emergence from bankruptcy court. The deal still needs
to be approved by shareholders, and three hedge funds--which
together own 9% of Smurfit--say they will vote against it because
Rock-Tenn's offer undervalues the maker of containerboard and
corrugated boxes.
For the quarter ended March 31, Rock-Tenn posted a profit of $37
million, or 92 cents a share, from $32.8 million, or 83 cents a
share, a year earlier. Excluding such items as alternative fuel tax
credits and restructuring costs, earnings rose to $1.04 a share
from 70 cents. Revenue increased 8.3% to $792.9 million.
Analysts surveyed by Thomson Reuters predicted earnings of $1.27
a share on revenue of $788 million.
Gross margin fell to 21% from 22%.
Total tons shipped increased by 18,531 tons, while the average
selling price for all paperboard and containerboard grades climbed
$59 a ton.
Revenue in the largest segment, consumer packaging, rose 6.2% on
higher paperboard selling prices. Sales climbed in the company's
three smaller businesses as well.
Separately, Smurfit-Stone reported swinging to a first-quarter
profit.
Earnings came in at $54 million, or 54 cents a share, compared
with a year-earlier loss of $89 million, or 35 cents a share. On an
adjusted basis, earnings were 43 cents a share, versus a
year-earlier loss of 23 cents. Net sales climbed 8.2% to $1.58
billion. Wall Street expected 46 cents in earnings per share on
$1.68 billion in revenue.
-By Joan E. Solsman and Lauren Pollock, Dow Jones Newswires;
212-416-2356; lauren.pollock@dowjones.com