Memphis-based International Paper Co. (NYSE: IP – $42.24) reported third period adjusted earnings of $1.56 per share, up from $1.01 in the year-ago period. That result was higher than the Street estimate of $1.48. The pulp and paper manufacturer posted revenue of $5.90 billion compared with $5.52 billion in the same quarter last year, exceeding analyst consensus of $5.87 billion.
- The Industrial Packaging segment adjusted operating profits were $598 million compared with $569 last year. In North America, earnings improved due to higher sales prices for boxes and containerboard and lower planned maintenance outage expense, partly offset by lower seasonal volumes and higher input and distribution costs. In Europe, seasonally lower volume and higher Madrid mill start-up costs negatively affected the quarter.
- Global Cellulose Fibers adjusted operating profits were $85 million compared with $69 million in the second quarter of 2018. Earnings improved on continued price realization, higher absorbent pulp sales volume and lower planned maintenance outage expense. Results were negatively impacted by $28 million associated with Hurricane Florence.
- Printing Papers adjusted operating profits were $188 million versus $94 a year ago. In North America, improved earnings were driven by further price realization and lower planned maintenance outage costs. Results were negatively affected by $7 million associated with Hurricane Florence. In Brazil, Europe and Russia, improved earnings were driven by seasonally stronger sales volumes and higher sales prices, which were partly offset by higher input costs.
The shares – up 6.5% in early trading – have been quite week of late as the industrial sector has moved out of favor sending shares of IP down with the market. However, full-year earnings should easily top $5.20 per share, given the strong third quarter results and next year should see around $5.48, thus providing for an extremely favorable forward price earnings ratio of 7.6. Also, the $2.00/share dividend provides for a 5% yield and investors – willing to accept some global growth risk – should be rewarded over time with decent total returns.