International Paper Reports Fourth Quarter Earnings of $.28 Per Share
Press release from the issuing company
PURCHASE, N.Y., International Paper (NYSE: IP) reported earnings before special and extraordinary items of $145 million ($.28 per share) for the fourth quarter compared with earnings before special items of $227 million ($.55 per share) for the fourth quarter of 1999. Third-quarter 2000 earnings were $260 million ($.53 per share) before one-time charges.
For the year, International Paper reported earnings of $969 million ($2.16 per share) before special and extraordinary items, compared with 1999 full year net earnings of $551 million ($1.33 per share) before special and extraordinary items.
Fourth-quarter 2000 net sales were $7.2 billion compared with $6.3 billion for the same period in 1999. Sales in 2000 of $28.2 billion were up from $24.6 billion in sales for 1999 primarily due to the Champion acquisition.
"The slowing economy and rising energy costs hit during a period in which demand is traditionally soft for most of our product grades. And as demand fell, we maintained our commitment to keep our production in line with customer orders, which negatively impacted overall sales," said John Dillon, chairman and chief executive officer. "While many of these factors are continuing into the opening months of 2001, the steps we are taking will lead to a stronger International Paper for the long term."
International Paper has nearly completed its previously announced capacity rationalization and realignment initiative. The company has closed its Mobile, Ala. and Camden, Ark. mills, and completed the down-sizing of the Courtland, Ala. mill. The closure of the Lockhaven, Pa. mill is proceeding on schedule.
The integration of International Paper and Champion International is proceeding extremely well. The Champion merger synergies target has been increased by 20 percent, to $500 million. In the fourth quarter, realized synergies amounted to $70 million.
Asset sales are progressing rapidly as International Paper focuses on its three core businesses -- paper, packaging and forest products. The company has increased its asset sales target to $5 billion including timberlands, to be completed by the end of 2001.
The company has paid down $900 million in debt since the Champion acquisition and will continue to use cash proceeds from divestitures to pay down debt in 2001.
International Paper's financial discipline will result in the reduction of capital spending to $1.2 billion in the year 2001, which is about 60 percent of depreciation and amortization. The capital expenditure program in 2001 is 20 percent below the $1.4 billion spent in the year 2000.
Higher energy costs, particularly natural gas, in the fourth quarter significantly impacted earnings. Energy costs were $40 million higher in the fourth quarter compared with the third quarter and were $220 million higher on the year. In response to high gas prices, the company switched to alternative fuels where possible.
International Paper also took significant downtime in the fourth quarter to keep production in line with demand. The company idled more than 800,000 tons of capacity in the fourth quarter alone.
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