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Officials of the Northbrook, Ill.-based company said Thursday that they saw a noticeable uptick in demand, particularly in June. That was good news for the 850-worker local mill, which was partially idled earlier this year.
The company said its second- quarter sales were $156 million, up 11 percent from the first quarter. Net income gained 63 percent over the same period to $18.1 million.
Year-over-year financial comparisons for KapStone are skewed because the 2008 numbers do not include sales from the North Charleston mill, which the company purchased with other assets from MeadWestvaco Corp. last July.
The local mill, which produces linerboard and brown paper for cor-rugated boxes, is KapStone's flagship operation.
Earlier this year, the company on several occasions idled one of the three machines there for a few weeks to bring production in line with sagging demand. Roger Stone, chief executive officer, said all lines were restarted in mid-June in response to stronger orders.
"Our backlogs are as good as we've seen since we bought (the Charleston mill), and we bought Charleston during good times," Stone said dur- ing a conference call Thursday.
Analysts call the packaging industry an economic bellwether because it is an early indicator of demand for durable goods like appliances and electronic equipment.
"The boxes themselves track really closely with truck freight and industrial throughput in the economy," said analyst Mark Wilde, who follows the paper industry for Deutsche Bank.
But Wilde tempered optimism about the business.
"Things have stabilized, but they've stabilized at a very, very low level," he said.
KapStone said it put $40 million in prepayment funds toward its debt this month. Stone also hinted that the company could put some of its extra cash toward acquisitions. He declined to be more specific.
Stone said he expects conditions to get better throughout the rest of the year.
"Prices are stable, and we believe the climate is right for improvement," Stone said. "We believe we are ramping up for better days, and we feel very positive about the future."
In addition to the North Charleston paper mill, KapStone also acquired from MeadWestvaco five wood-chip plants around South Carolina and a Summerville-based lumber business.
Reach Katy Stech at 937-5549 or kstech@postandcourier.com.
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