Coupled with a healthy opening programme, and on a relatively fixed cost base, profits really took off, jumping 53 per cent in the year to January.The pounds 11.3m pre-tax profits for the 12-month period represented a 31.3 per cent return on shareholders funds, a chunky improvement on last year's 22 per cent return and a massive increase on the 5 per cent return on assets recorded in the bleak days of the early-1990s recession.Investors shared in the good news with a 50 per cent rise in the full- year dividend to 18p (12p), almost four times the payout five years ago. A recovery may be some way off yet.A smart turn-out from Moss BrosIn a low inflation, highly competitive menswear market, producing an underlying 9 per cent rise in sales was an impressive performance from Moss Bros. Apart from uncertainty over the cycle, Smurfit's rating suffers from the group's state of limbo between the Irish market, which it has clearly outgrown, the UK and the US. The expected appointment of a new chief operating officer in the next few months will help clear up corporate governance worries in the UK, but it has still not been fully welcomed into the British investment community. Along with rivals, Jefferson Smurfit Corporation, the group's 46 per cent-owned separately-quoted associate in the US, had to shut mills at the end of last year.Profits cut to Irpounds 260m this year would put the shares, up 3p to 163p, on a lowly forward multiple of 10. The problem is that, given the integration of the world-wide industry, Smurfit's strengths become weaknesses in a downturn. The first full 12 months of Cellulose du Pin, the paper and packaging operations of Saint-Gobain acquired for Irpounds 684m in 1994, boosted profits from continental operations from Irpounds 34.6m to Irpounds 195m last year.Even so, with a return on capital well in excess of 20 per cent last year, the group has a fair chance of achieving its target of 15 per cent across the business cycle.

Smurfit points out, for example, that the fall in price of corrugated boxes - from around $873 a ton in the autumn to $820 now - is nothing like the drop in other areas. Smurfit's wide geographical spread also helps to spread risk.Those strengths meant the group was able to cash in on last year's price recovery, although the results were distorted by acquisitions and a change of year end in 1994. It also supplies much of the paper used to make its own products, helping to reduce exposure to the more volatile parts of the paper markets. But Dermot Smurfit, joint deputy chairman, refuses to be downbeat.Certainly, the group has world-leading positions in areas ranging from boxes and cartons to the container board that goes into them. At the same time there is no shortage of capacity, particularly in the US where new plant is set to further increase supplies of the corrugated board used in packing cases. All this gloom is hard to reconcile with Smurfit's bounding optimism six months ago and yesterday's announcement of record 1995 profits totalling Irpounds 420m (pounds 433m), the highest ever seen by an Irish company.

After soaring last year, prices in some areas of the industry have come rattling back down again. Pulp, for instance, is now selling for around $500 a ton compared with $925 in October. The outlook for the paper cycle has seldom been so uncertain and Jefferson Smurfit, the Irish paper giant, is not alone in being unable to guess "whether the recent industry inventory correction represents a de-stocking pause or the end of the cycle". Airlines enjoyed a better market in 1995/96 and that is set to continue. I believe the industry has reached the bottom of its cycle."Retail services fared much better, with operating margins, up from 2.9 per cent to 3.2 per cent, pushing operating profits pounds 1.4m higher to pounds 9.7m. During the year, Alpha reached agreement with the government of Sri Lanka to buy 60 per cent of Orient Lanka, the airport duty free operator at Bandaranaike International Airport, where Orient has a 10-year concession on the sale of duty free.. That contract represented about 50 per cent of the group's turnover at JFK and its loss contributed to the fall in catering profits from pounds 13.9m to pounds 10.3m.The chief executive, Paul Harrison, remained optimistic, however: "We expect catering to improve as growth continues across all sectors of aviation services.