VOL. 129 | NO. 146 | Tuesday, July 29, 2014
International Paper Profits Fall 38 Pct.
By Bill Dries
International Paper reported second quarter earnings of $161 million Tuesday, July 29, a $98 million drop from the second quarter a year ago when IP reported net earnings of $259 million.
The drop in profits came as the Memphis-based company took restructuring charges including a new pre-tax loss of $324 million. Most of that, $262 million before taxes, was for debt extinguishment.
There was also another installment on paying the costs associated with the closing of the International Paper mill in Courtland, Ala., of $49 million before taxes.
International Paper posted a net loss of $95 million in the first quarter of the year including a pre-tax charge of $495 million from the shutdown of the mill.
Despite a drop in profit in Q2, International Paper’s earnings of 95 cents per share – excluding debt repayment and other one-time items – beat Wall Street expectations of 83 cents per share.
As the second quarter ended July 1, the spin-off of xpedx, International Paper’s distribution segment, was completed. For its last quarter as part of International Paper, xpedx reported an operating profit of $11 million compared to $7 million in the first quarter. The corporation also took an $18 million pre-tax charge for the costs associated with the spin-off
Xpedx is merged with Unisource Worldwide Inc., of Atlanta, in what is now Veritiv Corporation.
Outgoing CEO John Faraci pointed to results in the industrial packaging segment as standing out. The division posted second quarter operating profits of $534 million compared to $467 million in the first quarter when International Paper took a hit from weather-related issues in North America. The second quarter had lesser challenges from planned maintenance outages totaling $200 million across International Paper.
The Tuesday earnings conference call with analysts was the first for incoming CEO Mark Sutton who also commented on some aspects of the company’s performance. Faraci’s retirement is effective in March.