International Paper Outlines 3 Year Strategy; Comments On Q1
Press release from the issuing company
STAMFORD, Conn., March 12 -- International Paper Chairman and Chief Executive Officer John Dillon today outlined the company's three-year profitability improvement targets at a presentation to investors in New York to the Morgan Stanley Mining, Paper and Packaging Conference. Mr. Dillon's presentation covered steps the company has taken to strengthen its operations as well as the company's plans to continue its programs to deliver stronger financial results.
"Over the last three years International Paper has undergone significant change to improve its competitive position and financial performance. We have been delivering on our promises to shareholders by focusing on the things we can control in a very difficult economy, and we're raising the target for the next three years, " said John Dillon.
"We've narrowed our business focus to three core businesses -- paper, packaging and forest products -- and divested $3 billion in non-core operations. We also strengthened our core businesses through a rationalization and realignment program that led to a more focused, more profitable IP. Operating earnings were up sharply in 2002, reflecting the success of these programs. I'm quite confident that the company will realize even greater profitability improvements through this continued internal approach, despite what's going on in the economy and the market.
"Our new focus for the next three years is to be among the best industrial companies in the world, with 9% ROI at trend line pricing. We plan to grow the top line with higher volumes and better mix, by providing the right value to the right customers. This customer-focused strategy, along with operational improvements, lower SG&A and improvements to our supply chain will improve our results by $1.5 billion by the end of 2005," said Dillon.
At the investor meeting, Dillon outlined the company's key priorities to improve its three core businesses, and he discussed how the company will grow revenue with key customer segments. Dillon said, "While the macro-environment has been very challenging for the last two years, IP has delivered stronger operational results, and there is still so much more to achieve in the coming years."
Commenting on current conditions, Dillon said, "The first quarter is typically seasonally weak, which has been compounded by the uncertainty about war with Iraq, higher energy costs and extreme weather conditions in the South. But we are focused on longer-term prospects to grow market share, improve our cost position and deliver returns for shareholders that compare to the best industrial companies. There is no doubt we will benefit from an economic recovery, but in the current period, we remain focused on the internal factors we can control."
Further commenting on the quarter, the company also said today that the mix of higher than anticipated energy costs, bad weather that has affected fiber costs and operational performance, combined with weakening demand, has negatively impacted operating earnings so far this year. At this point, the company expects that first-quarter operating earnings will be comparable to first-quarter 2002 operating earnings, which were $0.12 per share.
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