Jefferson Smurfit used its last results as a public company to warn that the weakening US dollar would hit demand for European and Latin American cardboard box production, as sales of manufactured goods into the US become less competitive.
After an upbeat assessment at the end of the first quarter - just a week after the announcement of an approach from Madison Dearborn, the US private equity house - the Ireland-based paper and packaging company used interim figures to warn that "the improving fundamental environment may not necessarily translate into superior performance within the current fiscal year".
In addition to currency difficulties, it cited the "greater than anticipated" increase in input costs. Demand from Chinese and other Asian waste-based mills has pushed up the cost of waste-fibre - the raw material for the bulk of European box production - from the equivalent of €45 a tonne to €135 over the period.
Container board prices in Europe have already been increased to reflect this, but as an integrated paper producer - using most of its container board for box production - analysts say Smurfit will have to wait until box prices pick up, expected by the year end, before it can recover costs.
The comments are the last as a public company. Jefferson Smurfit shareholders on Wednesday gave overwhelming backing to Madison Dearborn's cash and paper offer worth just under €3.5bn. Under the terms, Jefferson Smurfit shareholders receive €2.15 a share, and for every 16 shares they receive one share in Smurfit Stone Corporation, the US paper company in which Jefferson Smurfit has a 29.3 per cent interest.
Deutsche Bank, adviser to Madison Dearborn, said the offer had received 83.19 per cent acceptance by the first closing date on Wednesday - overcoming the 80 per cent hurdle for shareholders' approval under Irish rules.
It still has to secure backing from the various competition bodies and the share spin-off and the related capital reduction has to be approved by the High Court in Ireland.
The offer has been extended until August 20 when it is expected to go unconditional in all respects.
Gary McGann, who is retained as chief executive designate of the new entity, said yesterday's results would be the "the last, for now," indicating that the company could at some future date be re-floated.
One of the first steps of the new owners, will be the disposal of some of Jefferson Smurfit's non-core assets particularly the estimated €30 million paintings and sculpture collection that Michael Smurfit, chairman and son of the founder, had built up over the years.
Pre-tax profits for the half year to June 30 fell 15 per cent to €158 million after exceptionals, on turnover up 2 per cent at €2.26 billion.