IP Reports Earnings of 133 Million for Quarter
Thursday, May 01, 2008
Press release from the issuing companyMEMPHIS, Tenn., April 30 -- International Paper today reported preliminary first-quarter 2008 net earnings of $133 million ($0.31 per share) compared with net earnings of $327 million ($0.78 per share) in the 2007 fourth quarter and $434 million ($0.97 per share) in the first quarter of 2007. Amounts in all periods include special items, including a net after-tax gain in the first quarter of 2007 of $264 million ($0.59 per share) from sales and exchanges of businesses.
Earnings from continuing operations and before special items in the first quarter of 2008 were $175 million ($0.41 per share), compared with $294 million ($0.69 per share) in the 2007 fourth quarter and $203 million ($0.45 per share) in the first quarter of 2007.
Quarterly net sales were $5.7 billion, down slightly from $5.8 billion in the fourth quarter and up from $5.2 billion in the first quarter of 2007.
Industry segment operating profits were $332 million for the 2008 first quarter versus $566 million in the 2007 fourth quarter and $403 million in the first quarter of 2007. The quarter-to-quarter decrease reflects higher input costs, lower earnings from land sales and operating performance below expectations early in the quarter. Additionally, the company reported equity earnings, net of taxes, of $17 million from its 50 percent investment in Ilim Holding S.A., a separate reportable industry segment in Russia.
"We continued to realize price improvement in the first quarter," said Chairman and CEO John Faraci. "However, those gains were more than offset by sharply increasing input costs, as well as the expected quarter-to-quarter decline in earnings from land sales."
Commenting on the second quarter of 2008, Faraci said, "We are prepared to work through the weakness of the U.S. economy. Our business outside of North America continues to demonstrate healthy growth and solid pricing."
During the 2008 first quarter, in order to facilitate performance comparisons with other companies, the company changed its method of allocating corporate overhead expenses to allocate additional expense to its business segments. Accordingly, business segment operating profits for all periods have been restated to reflect this change. First-quarter 2008 segment operating profits and business trends compared with the previous quarter are as follows:
Operating profits for Printing Papers were $185 million, down from fourth-quarter operating profits of $243 million driven largely by higher raw material and energy costs and some unfavorable operating disruptions. Brazil experienced higher energy costs and operating expenses in the first quarter. U.S. sales volume declined slightly while Eastern Europe and Russia continue to show growth. Price realizations improved later in the quarter in North America.
Industrial Packaging operating profits were $97 million, down from $109 million in the prior quarter because of higher raw material and energy costs that were only partially offset by solid mill operations and pricing. Mill maintenance outage costs were higher than in the fourth quarter. The European box market was seasonally slower in the first quarter, but daily shipments were up quarter over quarter in the U.S.
Consumer Packaging operating profits were $9 million (including a $5 million charge relating to the reorganization of Shorewood's Canadian operations) compared with $15 million in the 2007 fourth quarter, driven by higher input costs as well as Shorewood's weak demand and costs associated with facility closures. The mills had fewer maintenance outages resulting in lower costs but they were largely offset by several operational issues. U.S. coated paperboard revenues remain strong, especially for cupstock. The foodservice business performed well with steady volume, solid operations and strong pricing.
The company's distribution business, xpedx, reported operating profits of $16 million, down from $28 million in the prior quarter driven by slower demand in some product segments, higher fuel and freight costs and bad debt expenses. Paper revenues remained steady while packaging and facility supplies experienced a seasonal slowdown.
Forest Products operating profits were $25 million, compared with fourth quarter operating profits of $171 million because of lower earnings from land sales. While land sales are difficult to forecast within a quarter, the company's objective continues to be to maximize net present value for shareholders.
Equity earnings, net of taxes, in Ilim Holding S.A. totaled $17 million for the quarter. This represents the company's 50 percent interest in Ilim's after-tax operating results for the quarter ended Dec. 31, 2007 (Ilim's results are reported on a one-quarter lag).
Net corporate expenses totaled $21 million for the quarter, down from $56 million in the 2007 fourth quarter and $37 million in the 2007 first quarter, reflecting lower pension expenses. Corporate overhead charges allocated to industry segments declined versus the 2007 fourth quarter because of lower medical and incentive compensation costs, and were about equal to 2007 first-quarter charges.
Copyright © 2016 WhatTheyThink. All Rights Reserved