International Paper Reports 3Q 2016 Earnings

International Paper (IP) reported third quarter 2016 net earnings attributable to International Paper of $312 million ($0.75 per share) compared with net earnings of $40 million ($0.10 per share) in the second quarter of 2016 and net earnings of $220 million ($0.53 per share) in the third quarter of 2015.
 
Adjusted operating earnings in the third quarter of 2016 totaled $380 million ($0.91 per share) compared with $379 million ($0.92 per share) in the second quarter of 2016 and $407 million ($0.97 per share) in the third quarter of 2015.
 
Quarterly net sales were $5.3 billion in the third quarter of 2016 compared with $5.3 billion in the second quarter of 2016 and $5.7 billion in the third quarter of 2015. The year-over-year revenue decline was primarily due to the sale of the IP-Sun joint venture and the Asian Corrugated Packaging business, as well as the sale of the Carolina Coated Bristols business.
 
Business segment operating profits in the third quarter of 2016 were $613 million, compared with $628 million in the second quarter of 2016 and $579 million in the third quarter of 2015.
 
Cash provided by operations was $341 million in the third quarter of 2016. Free cash flow (non-GAAP) was $575 million for the quarter.
 
“I’m pleased with our strong cash generation this quarter despite an uneven global economy and rising input costs,” said Mark Sutton, chairman and CEO. “We continue to see stable to improved market demand across most of our businesses, particularly North American Industrial Packaging. We have begun to implement the NA containerboard and box price increases and we remain focused on a fourth quarter close of the Weyerhaeuser pulp business acquisition. These key efforts, along with others, will increase shareholder value and give us confidence in our continued ability to generate strong and sustainable cash from operations and free cash flow.”
 
Industrial Packaging operating profits in the third quarter of 2016 were $424 million ($429 million excluding special items) compared with $459 million ($487 million excluding special items) in the second quarter of 2016. In North America, the negative impacts of box price erosion, increased input costs for recycled fiber and energy were only partially offset by lower planned maintenance costs. In Brazil, earnings improved primarily due to higher sales volumes and lower outage costs. Earnings in EMEA decreased due to seasonally lower sales volumes.
 
Printing Papers operating profits were $128 million ($135 million excluding special items) in the third quarter of 2016 versus $96 million ($101 million excluding special items) in the second quarter of 2016. Earnings in North America and Brazil benefited from lower maintenance outage costs. Operating costs improved, but commercial pressures negatively impacted price/mix. In Europe and Russia, improved operating costs were offset by lower sales prices.
 
Consumer Packaging operating profits were $61 million in the third quarter of 2016 compared with $73 million in the second quarter of 2016. The earnings decrease in North Americawas primarily due to unfavorable sales prices and mix, as well as higher costs. In Europe and Russia, higher sales volumes were more than offset by lower prices and higher costs.