Jan. 19--When Packaging Corp. of America reports its fourth-quarter results tomorrow afternoon, the results will offer new evidence of how the U.S. economy's tailspin is taking a toll across almost every sector.

The Lake Forest company, which calls itself the nation's fifth-largest producer of cardboard boxes and corrugated packaging products, warned investors six weeks ago that demand for containerboard and corrugated products was proving to be "significantly lower than expected" in the year's final quarter. As a result, it said, fourth-quarter earnings would fall short of earlier projections.

PCA didn't offer any new guidance when it issued its early-December caution. But analysts subsequently marked their profit projections down from 35 cents a share to 25 cents; that's well below the year-ago quarter, when PCA turned in strong earnings of $44 million, or 42 cents a share.

PCA isn't the only packaging company facing profit pressure. Because factories ship the products they make in corrugated containers, demand for corrugated boxes rises and falls in concert with the output of the nation's manufacturing sector.

With North American manufacturers now mired in a deep slump, the squeeze is on: debt-heavy packaging producer Chesapeake Corp. filed for Chapter 11 bankruptcy protection three weeks ago, and concerns about the financial state of another PCA rival, debt-heavy Smurfit-Stone Container Corp., have driven the trading price of Smurfit shares down to just a few pennies.

Packaging Corp. of America, which is saddled with less debt and has more operating flexibility in terms of production inputs, has been buffeted to a lesser extent.

Over the past six months, as packaging-industry conditions have weakened, Smurfit-Stone Shares have lost well over 90 percent of their value, while PCA closed Friday at $13.33 on the New York Stock Exchange.

In an industry where most players strive to grow and benefit from economies of scale, Packaging Corp. is an "anomaly," Morningstar analyst Daniel Rohr noted in recent commentary, because it is "far from the biggest corrugated box maker in the U.S., but it's one of the most profitable."

jpmiller@tribune.com

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