International Paper reports 4Q net sales of $5.4 billion
(Memphis, USA, Feb. 02, 2017) International Paper (NYSE: IP) today reported full-year 2016 net earnings attributable to International Paper of $904 million ($2.18 per share) compared with net earnings of $938 million ($2.23 per share) for full-year 2015. In the fourth quarter of 2016, the Company reported net earnings of $218 million ($0.53 per share) compared with $178 million ($0.43 per share) in the fourth quarter of 2015. Net earnings in all periods include the impact of special items, if any, non-operating pension expense and discontinued operations.
Annual net sales totaled $21.1 billion in 2016 compared with $22.4 billion in 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. Quarterly net sales were $5.4 billion in the fourth quarter of 2016 compared with $5.4 billion in the fourth quarter of 2015.
Full-year 2016 business segment operating profits were $2.2 billion compared with $2.4 billion in 2015. Business segment operating profits in the fourth quarter of 2016 were $464 million, compared with $483 million in the fourth quarter of 2015.
“I’m pleased with another year of strong cash generation and returns solidly above the cost of capital,” said Mark Sutton, Chairman and Chief Executive Officer. “While we experienced margin pressure in 2016, we enter the new year with an improving economic climate and several catalysts which we expect to improve profitability across International Paper. We are focused on serving our customers, strong operations and margin improvement, along with integrating the newly acquired pulp business and driving synergies. We remain confident in our ability to create shareholder value through thoughtful capital allocation with a near-term focus on debt reduction.”
The performance of the Company’s business segments is measured quarter to quarter without variations caused by special items, as management focuses on business segment operating profits excluding those items. The combination of IP’s legacy pulp business with the acquired pulp business in 2016, will now be called Global Cellulose Fibers and reported as a separate business segment (previously reported in Printing Papers). Prior periods have been restated to reflect this change. Fourth quarter 2016 business segment operating profits and business trends compared with the prior quarter are as follows:
Industrial Packaging operating profits in the fourth quarter of 2016 were $372 million ($379 million excluding special items) compared with $424 million ($429 million excluding special items) in the third quarter of 2016. In North America, improved sales price realization was more than offset by slightly lower box shipments due to fewer shipping days, higher input costs and higher operating costs, including an inventory valuation adjustment. Operating profits in EMEA improved, due to seasonally higher sales volumes.
Global Cellulose Fibers operating profits in the fourth quarter of 2016 were a loss of $70 million (a loss of $32 million excluding special items) compared with a loss of $39 million (a loss of $32 million excluding special items) in the third quarter of 2016. The legacy IP business was negatively impacted by lower sales prices and an unfavorable mix, partially offset by lower planned maintenance outage costs. The segment reflects the operating profits for one month from the newly acquired pulp business.
Printing Papers operating profits were $121 million in the fourth quarter of 2016 versus $167 million in the third quarter of 2016. Earnings in North America were impacted by higher maintenance outage costs, seasonally higher operating costs and an unfavorable product mix. In Brazil, seasonally stronger sales volumes were partially offset by higher operating costs. Operating profits in EMEA were lower due to higher planned maintenance outage expenses, as well as higher input costs.
Consumer Packaging operating profits were $41 million in the fourth quarter of 2016 compared with $61 million in the third quarter of 2016. The earnings decrease in North America was primarily due to seasonally lower volume, seasonally higher operating costs and higher planned maintenance outage expenses.
International Paper recorded Ilim joint venture equity earnings of $45 million in the fourth quarter of 2016 compared with $46 million in the third quarter of 2016. The Company recognized a non-cash after-tax foreign exchange gain of $6 million in the fourth quarter of 2016 ($0.01 per share), compared with a gain of $3 million in the third quarter of 2016 ($0.01 per share).
To learn more, please visit: www.internationalpaper.com (Source: International Paper)