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VOL. 127 | NO. 84 | Monday, April 30, 2012

International Paper Q1 Profits Drop 47 Pct.

By Bill Dries

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Memphis-based International Paper Co. saw its first-quarter profits drop 47 percent from the first quarter of 2011.

But the earnings were ahead of Wall Street forecasts.

International Paper CEO John Faraci said the number reflected a quarter that is usually a down quarter for most companies. Faraci added it was IP’s second-best first quarter since 2000.

He characterized the performance as “solid” in “an uneven global recovery.”

“We’re really setting the stage I think for a big step up in 2013,” Faraci said on a Friday, April 27, earnings call with analysts.

International Paper reported net income of $188 million, or 43 cents per share, for the three months ended March 31, down from $354 million, or 81 cents per share, in the same quarter last year.

Excluding one-time items, the company posted adjusted profit from continuing operations of 57 cents per share for the recent quarter. Analysts, on average, expected a profit of 50 cents per share, according to a survey by FactSet.

Revenue rose 4.2 percent to $6.66 billion from $6.39 billion. Analysts expected $6.8 billion in revenue.

IP had net corporate expenses for the quarter of $69 million compared to $44 million a year ago and $31 million for the fourth quarter of 2011. The company said the rise reflected higher pension expenses.

Sales at International Paper’s industrial packaging business rose 22 percent to $3.11 billion, but operating profit fell 30 percent to $215 million as a result of operational problems, increased production outages and higher costs, the company said.

The company said its $3.51 billion acquisition of smaller rival Temple-Inland Inc., which closed in February, did not significantly affect the latest earnings.

Faraci said the first quarter that reflected IP’s acquisition of Temple-Inland Inc. showed the integration of the Texas-based company is going well. The second quarter will be the first full quarter in which the acquisition is on the company’s books.

IP’s industrial packaging segment posted an operation profit of $278 million in the first quarter to lead all of the company’s divisions. But it was down from the $316 million profit in the segment in the last quarter of 2011.

Meanwhile xpedx, IP’s North American distribution business, had earnings of $19 million compared to $33 million in the last quarter of 2011.

The Associated Press contributed to this report.

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