International Paper (NYSE: IP) today reported third quarter 2015 net earnings attributable to common shareholders of $220 million ($0.53 per share) compared with net earnings of $227 million ($0.54 per share) in the second quarter of 2015 and $355 million ($0.83 per share) in the third quarter of 2014. Operating Earnings were $407 million ($0.97 per share) in the third quarter of 2015, compared with $409 million ($0.97 per share) in the second quarter of 2015 and $409 million ($0.95 per share) in the third quarter of 2014. Net earnings in all periods include the impact of special items, if any, non-operating pension expense and discontinued operations.
Quarterly net sales were $5.7 billion in the third quarter of 2015 compared with $5.7 billion in the second quarter of 2015 and $6.1 billion in the third quarter of 2014. Revenues continue to be negatively impacted by foreign exchange translation.
Business segment operating profits before special items in the third quarter of 2015 were $773 million, compared with $663 million in the second quarter of 2015 and $840 million in the third quarter of 2014.
Free cash flow was $512 million in the third quarter. Cash from operations was $837 million.
“International Paper delivered another strong performance in the third quarter, highlighted by 25% EBITDA margins in our North American Industrial Packaging business and excellent operating results from our Ilim Joint Venture,” said Mark Sutton, Chairman and Chief Executive Officer. “We remain confident in our ability to continue to deliver consistent, robust free cash flow and create long-term shareholder value, despite a global macro environment that remains challenged.”
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. Third quarter 2015 business segment operating profits and business trends compared with the prior quarter are as follows:
Industrial Packaging operating profits in the third quarter of 2015 were $553 million compared with $528 million in the second quarter of 2015. In North America, earnings were higher due primarily to lower planned maintenance outage costs, partially offset by lower export pricing and higher input costs.
Printing Papers operating profits were $179 million in the third quarter of 2015 versus $101 million in the second quarter of 2015. Earnings in North America were higher due to increased volume, strong operations and lower planned maintenance outage expenses. In Brazil, earnings improved primarily due to seasonally higher volume in the domestic Brazilian market and strong results on export sales.
Consumer Packaging operating profits were $41 million (a loss of $153 million including special items) in the third quarter of 2015 compared with $34 million ($47 million including special items) in the second quarter of 2015. In North America, improved manufacturing operations and lower planned maintenance outage costs were partially offset by weaker commercial conditions, which resulted in increased market-related downtime, slightly lower prices and a less favorable mix. Earnings in Europe were higher mainly due to increased volume and lower planned maintenance outage costs.
International Paper recorded Ilim joint venture equity loss of $9 million in the third quarter of 2015 compared with earnings of $67 million in the second quarter of 2015. Primarily due to Ilim’s U.S. dollar denominated net debt, the company recognized a non-cash after-tax foreign exchange loss of $65 million in the third quarter of 2015 ($0.15 per share), compared with an after-tax gain of $27 million in the second quarter of 2015 ($0.06 per share). The JV recorded record operational EBITDA results for the quarter due to increased margins on export sales and strong operational performance.