Aggressive · Income · Stocks to Consider and Updates

International Paper Posts Strong Results

Memphis-based International Paper Co. (NYSE: IP – $52.01) reported adjusted earnings in the first quarter were $395 million – or $0.94 per share – compared with $232 million ($0.56 per share) in the first quarter of 2017, and five cents better than Street views. Sales were $5.6 billion versus $5.1 billion last year and was ahead of the $5.47 billion analyst consensus. By business segment:

  • In North America, strong demand in box and export containerboard markets, along with price realization, were more than offset by seasonally lower sales volume, production constraints due to weather related disruptions and maintenance outage costs.
  • Global Cellulose Fibers, higher sales price realizations were partially offset by seasonally lower sales volume, while planned maintenance outage costs increased significantly as 40% of the 2018 annual outages were completed in the first quarter.
  • Printing Papers in North America, benefited from increased sales prices and a favorable mix that were more than offset by higher planned maintenance outages and higher input costs related to transportation and energy. In Brazil, seasonally lower sales volumes and an unfavorable geographic and product mix exceeded the benefits from higher sales price realizations.  In Europe and Russia, earnings decreased due to higher planned maintenance outage costs, higher input costs and lower sales volumes, partly offset by improved pricing.

      The maker of paper and packaging products is looking for solid fundamentals across its portfolio in the years ahead. Too, benefits from previously announced price increases within the North American Industrial Packaging and Printing Paper units ought to help. This, when combined with a lower U.S. corporate tax rate, should result in another year of strong cash flow growth. Full-year earnings are estimated at $4.88 on an adjusted basis compared to last year’s $3.51. Next year, IP may see profits grow to $5.47 per share. The shares also yield 3.5% at current levels.

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