With the packaging industry worldwide showing signs of getting to grips with overcapacity and product pricing, Mr Gary McGann - Smurfit's new chief operating officer - agrees that he is taking charge of the group at a good time.
"Yes it is a good time to be taking over as chief operating officer, but it has taken 12 hard months to get to this point," Mr McGann states.
Since the merger between Smurfit's American offshoot, Jefferson Smurfit Corporation, and Stone Container last year, the packaging industry worldwide has seen dramatic changes - and most of them are for the good of an industry in which Smurfit and the merged Smurfit Stone are major players.
Production capacity has been dramatically cut back, product prices have been increased twice and those price rises have stuck. The major world economies where Smurfit operates are either performing well or returning to growth. But the notoriously cyclical packaging industry has seen many false dawns. What makes Gary McGann so convinced that the current recovery can be sustained?
"There is never any guarantee but there are a number of factors which point to the current upswing being maintained. It all stems from the Smurfit Stone merger after which 1.1 million tons of capacity were taken out while the industry took out a total of 2.5 million tons of capacity. The vast majority of that is permanent capacity takeout and there has also been a lot of market-related downtime.
"There is a recognition in the industry that it is adequately invested in many areas. And as a consequence of those factors, price increases have gone ahead at unlikely times of the year - February in the US and September in Europe," he states.
One major factor is the growing dominance of the industry by publicly quoted companies with shareholders who want to see value being delivered. They are also prepared to take a more aggressive line towards companies which they believe are upsetting a recovery by maintaining overcapacity.
"Shareholders in the US are beginning to be a lot more active and vociferous as to what creates value and what does not. The feedback that we are getting is that they are supportive of what we are doing and are voting with their feet against companies who do not support sensible supply side management in the industry. The jury's still out, but there are differences this time around which suggest that the recovery can be sustained."
Mr McGann has also urged the rest of the industry not to be overaggressive on pricing now that capacity has been taken out and inventories are at their lowest levels for some time. In particular, he has urged the industry not to try and impose another price increase on top of the two already introduced this year. "Another price increase would be one too many," he said. He warned that while such an increase might be sustained, it might also have the effect of shortening the recovery in the industry.
He emphasises that the recent price increases are "simply price restorations and not really price increases and any reasonable purchaser will recognise that.
"The objective of the industry should be sustainable growth throughout the cycle, one aim is to manage supply and the other is to have a relationship with customers so that that they are not hit unduly on the bottom line, and more sensible price agreements can be engaged for the long haul."
Mr McGann says that so far none of Smurfit's competitors has jumped the gun and tried to impose a third-price increase.
He accepts that Smurfit shareholders have had a difficult time in recent years - the shares are no higher than they were five years ago and Smurfit has lost its pre-eminent position on the Irish stock market.
"Historically, Smurfit has always traded at a discount both to its American and European peer group. That might have been because of confusion, lack of clarity and perhaps leadership was not as evident as it is now. But the market is taking the view now that there is no reason why we should be at a discount to our peer group. We have very significant assets, we're the largest global player in corrugated, we have geographic, economic and currency risk spread and a very significant dollar base. We are seeing signs that the gap in valuation is being seen more as an opportunity than a reality," he states.
The incoming chief operating officer does not get involved in forecasts, but in typical marketspeak, says he is "comfortable" with the forecasts from Smurfit's Irish broker, Davy. Analyst Joe Burnell sees profits next year almost trebling to €400 million (£315 million), as the supply-and-pricing measures show through.
"The contrast between the outlook for the group now and what it was 12 months ago is quite stark and extreme. A year ago, Asia was in the pond, there were worries about declining European economies, Latin America had lots of problems and there were worries about the US economy. But [Federal Reserve chief, Alan] Greenspan's steady hand on the tiller when the rest of the world seemed to have gone walkabout was the key. Now there is good reason to be confident," he states.
