International Paper Co. (NYSE: IP – $55.85) said earnings per share fell to $0.65 from $0.92 a year earlier, but met analysts’ estimates. Revenues rose to $5.77 billion in the quarter from $5.32 billion a year ago, coming in ahead of the $5.72 billion consensus. By segment:
- Industrial Adjusted Packaging operating profits were $407 million (excluding special items) compared with $360 million in the first quarter. U.S. box shipments remained strong driven by favorable domestic conditions. Earnings were also favorably affected by solid sales price realization and strong demand for U.S. kraft linerboard exports, partly offset by mill outage costs and rising costs for recycled linerboard.
- Global Cellulose Fibers operating profits in the second quarter of 2017 were $12 million (excluding special items) compared with a loss of $51 million in the prior period. The business achieved record fluff pulp sales volumes in the quarter as global demand for fluff pulp remained strong. Greater synergy benefits from the Weyerhaeuser acquisition, favorable pricing and lower overall manufacturing cost, along with lower planned maintenance outage expenses, contributed to the earnings increase.
- Printing Papers adjusted operating profits were $88 versus $100 million in the first quarter of 2017. Earnings in North America were impacted by lower sales volumes, unfavorable mix and heavy maintenance outage expenses, partially offset by higher export sales volume from Brazil.
- And finally, Consumer Packaging operating profits were a loss of $5 million excluding special items compared with adjusted earnings of $33 million in the first quarter of 2017. The earnings decrease was largely attributable to annual outage expenses and reliability issues at the Augusta, GA mill.
“Looking forward, we see margin expansion associated with the realization of our announced price increases, acquisition synergies and significantly lower outage expenses driving a very strong second half and putting IP on track to deliver our full year earnings target,” the company said. Earnings growth prospects are supported by the opportunity for continued expansion in IP’s Global Cellulose Fibers division. That said, the issue offers a high dividend yield (3.2%) and above-average long-term capital gains potential.