International Paper Beats on Q3 Earnings, Revenues Up Y/Y

International Paper Company (IP) reported operating earnings (excluding one-time items) of $409 million or 95 cents per share for the third quarter of 2014 compared with $455 million or $1.01 per share in the year-ago quarter. The earnings comfortably beat the Zacks Consensus Estimate of 88 cents.

Net earnings came in at $355 million or 83 cents per share compared with $382 million or 85 cents per share in the year-ago quarter.  The reported earnings were lower due to high income tax provision.

Net sales for the second quarter were $6,051 million versus $5,975 million in the year-ago quarter and came above the Zacks Consensus Estimate of $5,968 million.

Segment Performance

Industrial Packaging: Sales from this segment stood at $3754 million versus $3,755 million in the year-ago period. Operating income came in at $527 million versus $499 million in the year-ago quarter. The significant year-over-year improvement in operating income was driven by strong operating performance and lower maintenance outage costs, partially offset by lower export volume.

Printing Papers: Sales were down 6.5% year over year to $1,453 million in the reported quarter, while operating income was $177 million versus $93 million in the year-ago quarter. The increase in operating income was driven by fewer planned maintenance outages, lower closure costs for the Courtland mill, strong mill operations and higher sales volumes (domestic and export).

Consumer Packaging: Sales from this segment inched down 1.0% year over year to $876 million. Operating profit was $77 million versus $73 million in the year-ago quarter.  The increase in operating profit was driven by solid operations and lower maintenance outage costs.

Balance Sheet 

Cash and temporary investments aggregated $1,718 million at quarter-end. Cash flow from operating activities for nine months ended Sep 30 was $1,933 million, while long-term debt stood at $8,988 million.

International Paper recorded an Ilim joint venture equity loss of $70 million for the quarter, compared with equity earnings of $43 million in second-quarter 2014. Operating earnings were flat quarter over quarter, as higher planned outage costs were offset by seasonally lower wood expenses and improving operations.

Outlook

Memphis-based International Paper is one of the leading producers of containerboards used to make corrugated brown boxes for shipping goods. Going forward, It continues to focus on enhancing free cash flow, increasing return on capital and returning cash to its shareholders.

International Paper currently has a Zacks Rank #4 (Sell). Other stocks that look promising and are worth a look include Mercer International Inc (MERC),  MeadWestvaco Corporation (MWV) carrying a Zacks Rank #1 (Strong Buy) and  Fibria Celulose SA (FBR) carrying a Zacks Rank #2 (Buy).

 

Read the Full Research Report on MWV
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Read the Full Research Report on FBR
Read the Full Research Report on MERC

 

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