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Containerboard: RockTenn expects 3-4% box volume drop, restarts two idle medium PMS

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Containerboard: RockTenn expects 3-4% box volume drop, restarts two idle medium PMS

September 12, 2014 - 11:16

OAKLAND, Sept. 12, 2014 (PPI Pulp & Paper Week) -RockTenn (RKT), the second largest North American producer, expects corrugated box volume for the September quarter to be down 3-4% from a year ago, "a bit more" than the 2-3% per day decline anticipated in the company's last conference call, CEO Steve Voorhees told a KeyBanc investment conference this week.

He said the main reason for the downward adjustment was that "specific customers have found business is not as strong as anticipated at the beginning of the quarter."

The company's per day box shipments were down about 2% in the June quarter, which at the time was blamed primarily on more company-specific factors such as box plant closures and "focus on profitability over volume."

Voorhees expects "year-over-year volume comparisons to flatten out over the next two or three quarters" and sees "primary demand for boxes relatively flat in the near term."

Two medium PMs restarting.Since mid-July the company has been taking "economic downtime" on two recycled medium machines to balance production with customer orders, Voorhees noted.

But RKT recently resumed production on the West Point, VA, recycled medium machine and has told employees that it will restart production on the idle Seminole recycled medium machine in Jacksonville, FL, within the next two weeks, according to Voorhees. (A local contact said the Seminole PM could restart as early as this weekend.)

Each machine has estimated production capacity of about 510 tons/day, indicating an estimated production loss from the two outages of more than 50,000 tons.

Despite the lower box volume and recent PM curtailments, Voorhees said the company is "reaffirming" its earlier earnings guidance of $1.00-1.10/share for the September quarter and $6.00 of free cash flow for the entire year.

Pratt Industrieshas officially opened its new $44 million corrugated box plant in Lewisburg, OH. The 350,000 ft2plant adjacent to the company's existing sheet plant is equipped with a 110-in BHS corrugator and several finishing machines. The new plant will eventually employ 150 workers. Anthony Pratt, the company's owner, told 100 customers and guests the new plant incorporates a number of innovative environmental features, including an innovative water reclamation system. It will be supplied by the company's new $260 million, 1,000 tons/day recycled containerboard mill being built next to the company's huge box plant in Valpariso, IN, which is scheduled for startup next fall.