Smurfit Stone Container Corporation, the 29.4 per cent US-based associate of Jefferson Smurfit Group, has reported a dramatic fall in first-quarter profits. Income before extraordinary items in the three months to the end of March was $19 million (€21 million) compared to $40 million last time. The first quarter figure includes once-off gains of $4 million as a result of an asset sale.

Sales grew by 7 per cent to $2.2 billion but several factors combined to depress profits, according to Mr Ray Curran, the president and chief executive. He cited mill downtime, reduced container shipments and higher energy costs. The weak first-quarter performance was reflected in earnings per share which fell to seven US cents from 18 US cents, although this also reflected a reorganisation of debt.

Energy costs increased by $20 million while the strong dollar depressed US manufacturing activity and demand for packaging, said Mr Curran. Smurfit expected pressure on pricing to continue, forcing it to take further substantial downtime at its mills. The company took the equivalent of 261,000 tonnes of downtime in its container board mill system and 27,000 tonnes of pulp downtime.

"In an extremely challenging demand environment, we are holding fast to our strategy of producing to meet orders only," said Mr Curran.

Jefferson Smurfit shares were unchanged in Dublin at £2.03.