International Paper Expects Lower First Quarter Earnings
Press release from the issuing company
March 29, 2001 PURCHASE, N.Y., March 29 - International Paper announced today that first-quarter earnings will be lower than current estimates as a result of the economic downturn, high energy costs and continued strong U.S. dollar, which is curtailing exports and fostering imports. Earnings for the first quarter 2001 are expected to be in the area of $.05 per share.
John Faraci, executive vice president and chief financial officer, will discuss first-quarter conditions in a webcast at 2 p.m. EST today. It can be accessed at http://investor.internationalpaper.com, under the heading "1Q 2001 Market Update." Persons who wish to listen to the live webcast must pre-register, beginning at noon.
To manage International Paper's inventories, the company continued to aggressively match its supply to customers' demands and took significant downtime in the first quarter. This market-related downtime amounted to about 500,000 tons in the first quarter for a cost of about $60 million.
"We are confident we are making the right moves for International Paper and its shareowners as we focus on our three core businesses -- paper, packaging and forest products," said John Dillon, chairman and chief executive officer. "Nevertheless, the world economic environment is continuing to pressure our business even as we move into a seasonally stronger part of the year."
The company's divestiture program is moving ahead as planned. In the first quarter, International Paper received proceeds from the sale of its west coast forestlands, oil & gas properties and Zanders, a European coated paper business. Earlier this month, the company announced the sale of its Curtis/Palmer hydroelectric project in Corinth, New York. Including all of these sales, the company will have generated $2 billion in proceeds from divestitures since the acquisition of Champion last June. The company is continuing to pay down debt and expects to pay down $3.5 to $ 4 billion by year-end 2001.
In the first quarter 2001, energy costs will be approximately $50 million higher than in the previous quarter. However, the upward energy pricing spiral, particularly natural gas, appears to be moderating somewhat. Additionally, the company experienced high wood costs and operating difficulties at some mills in January and February, however operations in have March improved.
Customer orders for most of International Paper's products in the United States are well below third quarter 2000 levels and even below diminished fourth quarter levels. Pricing for our products is mixed, but the pressure has a downward bias. Conditions in Europe, to date, remain good. Overall, the company is experiencing the adverse impact of softer worldwide economic activity.
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