International Paper Co.'s (IP) third-quarter profit more than
doubled on a pre-tax credit, exceeding expectations, but the
company still posted weakened sales as demand from its customers
continued to struggle.
Chairman and Chief Executive John Faraci said in July that it
appeared the worst of the economic downturn had passed, but the
paper and packaging company last week shuttered three of its U.S.
mills to cut capacity for freesheet paper by 19%, paperboard by 7%
and containerboard by 12% in the face of waning demand. It also
said it doesn't expect demand to return to 2008 levels "in the near
future."
"At the end of the third quarter, we began to see some modest
improvements in demand in some segments of our paper and packaging
businesses," Faraci said Wednesday.
International Paper reported profit of $371 million, or 87 cents
a share, up from $149 million, or 35 cents, a year earlier.
Earnings from continuing operations, excluding items such as a $525
million pre-tax alternative fuel credit, were 37 cents a share
compared with 84 cents a year earlier, when the company saw items
including pre-tax charges of $107 million and $155 million.
Revenue fell 13% to $5.9 billion.
Analysts polled by Thomson Reuters recently forecast earnings of
24 cents a share on $5.89 billion in sales.
Gross margin rose to 36.5% from 24.3%.
The company's industrial packaging segment saw revenue fall
3.9%, its printing papers segment saw sales decline 18%, and its
distribution segment saw revenues slide 20%.
Operating profit, which excludes items, more than quadrupled in
industrial packaging, more than tripled in its printing papers
segment and fell by 40% in its distribution segment.
Shares closed at $22.63 Tuesday and didn't trade premarket
Wednesday. As of Tuesday's close, shares have nearly doubled this
year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com;