International Paper Reports Earnings: Printing Papers, xpedx Sales Down
Press release from the issuing company
STAMFORD, Conn., Jan. 22 - International Paper reported 2001 fourth-quarter earnings of $58 million ($0.12 per share), compared with $145 million ($0.28 per share) in the fourth quarter 2000 and $68 million ($0.14 per share) in the third quarter 2001. All figures are before special and extraordinary items.
For the year 2001, International Paper reported earnings of $214 million ($0.44 per share) before special and extraordinary items, compared with 2000 full year net earnings of $969 million ($2.16 per share) before special and extraordinary items.
Fourth quarter net sales were $6.3 billion compared with $7.2 billion for the same period in 2000 and $6.5 billion in the third quarter of 2001. Sales for the year 2001 were $26.4 billion compared to 2000 annual sales of $28.2 billion.
"Our earnings improved in the second half compared to first half performance, due in large part to our cost reduction programs and business and facility rationalizations. This positively impacted our results for the year,'' said John Dillon, International Paper chairman and chief executive officer. "There is no doubt the company continued to face weak economic conditions during the fourth quarter; but we remain focused on key internal improvements, and we continue to manage our inventories. At year-end, our inventory levels were nearly 10 percent lower than a year ago.''
During the fourth quarter, the company also benefited from increased volumes of large land sales in the Forest Resources business and an adjustment in the annual tax rate that resulted in $0.05 and $0.03 per share improvements, respectively, in earnings before special and extraordinary items for the quarter as compared with third quarter 2001.
After special items, International Paper reported a 2001 fourth-quarter net loss of $572 million ($1.19 per share), compared with a net loss of $371 million ($0.85 per share) in the 2000 fourth quarter after special and extraordinary items. In the third quarter of 2001, the company reported a net loss of $275 million ($0.57 per share) after special items.
Special items in the 2001 fourth quarter totaled a loss of $745 million ($630 million after taxes, or $1.31 per share), including charges for asset shutdowns of excess internal capacity and cost reduction actions, losses related to dispositions and asset impairments of businesses held for sale, and a credit for the reversal of reserves no longer required. In the fourth quarter of 2000, special and extraordinary items netted to a loss of $762 million ($516 million after tax, or $1.13 per share). This included special charges for asset shutdowns of excess internal capacity and cost reduction actions, merger integration costs related to the Champion acquisition, and a credit for the reversal of reserves no longer required as well as a net extraordinary loss related to dispositions and asset impairments of businesses held for sale. Third-quarter 2001 special items of $434 million ($343 million after taxes, or $0.71 per share) included charges for asset shutdowns of excess internal capacity and cost reduction actions, an increase in litigation related reserves, and a net loss related to dispositions and asset impairments of businesses held for sale.
After special and extraordinary items, International Paper reported a 2001 net loss of $1.2 billion ($2.50 per share). Net earnings for 2000 after special and extraordinary items were $142 million ($0.32 per share).
"In 2001, we made significant progress toward our programs to change the company -- focusing on our core businesses, divesting non-strategic assets, aggressively managing costs and capital spending and enhancing our focus on customers,'' said Dillon.
Since the completion of its June 2000 acquisition of Champion International, International Paper has completed divestitures totaling $2.7 billion. During the fourth quarter, International Paper announced the addition of its Industrial Papers business to the company's divestiture program. The company also announced plans to shut down the Oswego, N.Y., containerboard mill and completed the previously announced shutdown of the Erie, Pa., pulp operation, at the end of the fourth quarter.
Commenting on the coming year, Dillon said, "Although we expect a weak first quarter, we do expect to see improvement begin in the second quarter. While macro-economic factors will impact results, we expect our performance will improve in 2002.''
Compared to fourth quarter 2000, earnings were down in most segments reflecting lower volumes and prices caused by the economic slowdown and the strong U.S. dollar.
Fourth-quarter segment earnings and business trends compared with the third quarter of 2001 are as follows.
Fourth-quarter earnings for Printing Papers were $119 million, down from third-quarter 2001 earnings of $146 million as a result of seasonally reduced demand for coated paper. Demand was also lower in commercial printing grades, while pulp remained under pricing pressure.
Industrial and Consumer Packaging earnings were $129 million in the fourth quarter, up slightly from $127 million in the third quarter. Bleached Board shipments were stronger versus the prior quarter, marginally offsetting the impact of the strong dollar and lower prices across the sector. Containerboard volume was steady, but lower prices and mix resulted in decreased earnings.
The company's distribution business, xpedx, reported a $10 million loss for the fourth quarter 2001 compared with earnings in the third quarter of $5 million, as a result of weak business conditions and lower sales volumes.
Fourth-quarter Forest Products earnings of $153 million were down from $184 million in the third quarter 2001. Earnings were impacted by sharply lower lumber prices and volume, which were partially offset by solid results in the Forest Resources business.
Earnings at Carter Holt Harvey, International Paper's 50.5 percent owned subsidiary in New Zealand, rose to $8 million in the fourth quarter 2001, versus third-quarter 2001 losses of $1 million. Strong Australian residential construction volumes and seasonal improvement in New Zealand were coupled with strong tissue and packaging sales.
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