Memphis-based International Paper Co.’s profits dropped 39 percent in the second quarter of 2012 with revenue growth lower than analysts had expected.
IP reported net earnings for the second quarter of 2012 of $134 million, down $85 million from the same quarter a year ago.
The earnings figures released Thursday, July 26, include special items that before taxes totaled $157 million.
Those costs reflected a continued restructuring of International Paper, including the coming divestiture of a mill in Oxnard, Calif., that is part of the agreement for IP’s acquisition of Temple-Inland on Austin, Texas. The $62 million pre-tax charge to adjust for the value of the mill was the largest of the special items.
International Paper chairman and CEO John Faraci said he was “encouraged” by continuing integration efforts with Temple-Inland and the start up of a fluff pulp facility in Franklin, Va.
He also noted other areas that weren’t as encouraging during the quarter. That included $25 million in equity losses, net of taxes, on Ilim Group.
That is IP’s 50-50 joint venture with Ilim Holding in Russia where Ilim operates three paper mills and turns out pulp, board and paper that is sold in Russia and China. Ilim took after tax foreign exchange losses of $41 million in the quarter. Ilim showed equity earnings in the first quarter of $40 million, net of taxes.
“Despite continued slow growth in North America, uneven global demand and currency headwinds primarily at our Ilim joint venture, we managed to turn in a solid quarter,” Faraci said.
Other special items included $10 million pre-tax for cost of restructuring xpedx operations, IP’s printing distribution business.
The North American-based subsidiary reported a loss in operating earnings of $2 million with special items compared to the first quarter of 2012.
Faraci and other IP executives have said xpedx is working through a commercial printing market that is struggling. And commercial printing is the bulk of xpedx’s revenues.