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VOL. 126 | NO. 23 | Thursday, February 03, 2011

International Paper Reports Q4 Profit

By Bill Dries

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International Paper Co. reported net earnings of $316 million for the fourth quarter of 2010 and net earnings for all of 2010 of $644 million, a $19 million drop for the year from 2009.

The Memphis-based paper packaging company’s earnings for the fourth quarter compared to a net loss of $101 million in the fourth quarter of 2009.

The results surpassed Wall Street expectations, sending shares to a 52-week high early in the session.

Excluding restructuring costs, pretax charges and other one-time items, the company earned 68 cents per share, up from adjusted earnings of 24 cents per share in the year-ago period. Analysts polled by FactSet were expecting 66 cents per share.

International Paper chairman and chief executive officer John Faraci characterized the year-over-year fourth quarter results as “strong with solid revenue growth and margin expansion across International Paper business segments.”

“We expect to further build on our strong earnings and free cash flow momentum in 2011,” he said in a Thursday conference call.

The fourth quarter net earnings came after record earnings in the third quarter of 2010 of $397 million. The earnings then were attributed to a combination of increased sales and a decision to increase prices of some products.

Among the business trends affecting International Paper’s business segments in the fourth quarter were a seasonal drop in box demand in industrial packaging coupled with higher box prices and higher mill and fiber costs; and higher energy usage, which is seasonal, in the production of printing papers along with lower market pulp demand in North America and seasonally higher pulp demand in Brazil.

Xpedx, International Paper’s distribution business, saw a drop of operating profits from $22 million in the third quarter to $9 million in the fourth quarter. The drop was attributed to paying one-time costs that came from xpedx closing some retail and printing equipment segments.

The fourth quarter report is the last that will include forest product earnings as a separate segment. International Paper sold the last of its land portfolio in North America during the third quarter of 2010.

International Paper expenses of $63 million were up for the fourth quarter compared to a year ago and from the third quarter of 2010. The company cited supply chain expenses as well as year-end pension costs.

International Paper announced last month it would raise its quarterly dividend by 50 percent, to 18.75 cents.

Faraci said then the move “reflects our intent to restore our dividend to pre-recession levels.”

– The Associated Press contributed to this report

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