International Paper Reports Higher 2Q Sales -- Lower Profits Described as 'Pothole', Haven't Tempered Mood of Investors

By Evanoff, Ted | The Commercial Appeal (Memphis, TN), July 27, 2012 | Go to article overview

International Paper Reports Higher 2Q Sales -- Lower Profits Described as 'Pothole', Haven't Tempered Mood of Investors


Evanoff, Ted, The Commercial Appeal (Memphis, TN)


Taking over a Texas rival this year has helped cushion Memphis- based International Paper Co. from a falling ruble in Russia.

The global paper and cardboard maker, the largest manufacturer based in Tennessee, said on Thursday that quarterly profits slipped to $134 million, equal to 31 cents for each share of stock in investors' hands. Earnings a year earlier reached $224 million, or 52 cents per share.

Despite the slide in profits, future-minded investors continued buying International Paper shares on the stock market Thursday afternoon.

As a result, the stock price of the 70,000-employee company closed at $32.44 per share, a gain of $1.07, or almost 3.5 percent, since the stock market closed on Wednesday.

Two reasons for investor interest: International Paper is raising prices on some prime U.S. product lines, including cardboard shipping containers by $50 per ton. And profits were down largely because of one-time charges that if not counted would have brought earnings to 46 cents per share. This neared Wall Street's expectations.

Analysts who study the paper industry for investors had forecast, on average, profits of 47 cents per share.

Boosting the quarter's performance were the operations of Temple- Inland Inc., the Austin-based packaging maker acquired in February. Those operations contributed about 8 cents per share.

It's in a segment of our company that is doing pretty well, said Carol Roberts, IP's chief financial officer.

After the acquisition, International Paper rapidly integrated its supply chain with Temple-Inland's mills and plants, Roberts said. The process helped deliver larger quarterly profits faster than expected, IP executives said.

Overall, International Paper reported global revenue of $7.08 billion in the quarter ended June 30, compared to $6.6 billion in the same quarter last year. The increase was largely due to Temple- Inland's operations. In 2011, the Texas company reported annual sales of about $4 billion.

IP paid $4.5 billion for the Austin company. The deal makes International Paper the nation's No. …

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