International Paper Reports Third Quarter 2017 Earnings

International Paper (NYSE: IP) today reported third quarter 2017 net earnings attributable to International Paper of $395 million or $0.95 per share compared with net earnings of $80 million or $0.19 per share for the second quarter of 2017 and net earnings of $312 million or $0.75 per share in the third quarter of 2016. Net earnings in all periods include the impact of special items, if any, non-operating pension expense and discontinued operations.

Adjusted operating earnings in the third quarter of 2017 were $449 million or $1.08 per share compared with $270 million or $0.65 per share in the second quarter of 2017 and $380 million or $0.91 per share in the third quarter of 2016.

Quarterly net sales were $5.9 billion in the third quarter of 2017 compared with $5.8 billion in the second quarter of 2017 and  $5.3 billion in the third quarter of 2016. The year-over-year revenue increase was primarily due to the pulp business that was acquired in late 2016.

Business segment operating profits in the third quarter of 2017 were $707 million, compared with $129 million in the second quarter of 2017 and $613 million in the third quarter of 2016.  The second quarter of 2017 includes the impact of the Kleen Products settlement.

Cash provided by (used for) operations was $(709) million in the third quarter of 2017 and $341 million in the third quarter of 2016.  Free cash flow (non-GAAP) was $624 million for the third quarter of 2017 and $575 million in the third quarter of 2016.  The third quarter 2017 cash used for operations includes a $1.25 billion cash contribution to the U.S. qualified pension plan and the $354 million Kleen Products settlement.

“We had a solid third quarter driven by price realization across key businesses and significantly lower maintenance outage costs, even as our operations were impacted by two hurricanes and record high recycled fiber prices,” said Mark Sutton, Chairman and Chief Executive Officer. “Looking forward, continued strong demand across our Industrial Packaging and Global Cellulose Fibers businesses, combined with prior price increases, should keep International Paper on track to deliver our expected targeted earnings growth in 2017.”

SEGMENT INFORMATION
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 (non-GAAP).  The combination of IP’s legacy pulp business with the acquired pulp business in 2016 is now 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.  Third quarter 2017 business segment operating profits and business trends compared with the prior quarter are as follows:

Industrial Packaging operating profits in the third quarter of 2017 were $469 million ($484 million excluding special items) compared with $50 million ($407 million excluding special items) in the second quarter of 2017.  In North America, overall market conditions remain healthy, resulting in higher sales price realizations for containerboard and boxes. Planned maintenance outage costs were lower, partially offset by higher input costs primarily for recycled fiber.  The negative impact of the hurricanes in the third quarter was about $20 million. Sales volume in EMEA was seasonally lower, while Brazil results  improved due to higher sales volume and prices.

Global Cellulose Fibers operating profits in the third quarter of 2017 were $49 million ($57 million excluding special items) compared with $7 million ($12 million excluding special items) in the second quarter of 2017.  Improvement in earnings was driven by improved sales prices, lower maintenance outage costs and strong synergy realization.  The negative impact of the hurricanes in the third quarter was about $5 million.

Printing Papers operating profits in the third quarter of 2017 were $135 million versus $86 million ($88 million excluding special items) in the second quarter of 2017.  In North America, seasonally higher sales volumes and lower maintenance outage costs were slightly offset by sales price erosion.  Higher export sales prices, higher domestic sales volumes and lower maintenance outage costs in Brazil were partially offset by lower export sales volumes and unfavorable foreign exchange. Earnings in Europe and Russia were higher primarily due to lower maintenance outage costs.

Consumer Packaging operating profits in the third quarter of 2017 were $54 million compared with a loss of $14 million (a loss of $5 million excluding special items) in the second quarter of 2017.   Earnings increased in North America due to increased sales prices, higher sales volumes, improved operations and lower maintenance outage costs. Earnings in Europe reflect higher sales volumes and lower maintenance outage expenses.

International Paper recorded Ilim joint venture equity earnings of $48 million in the third quarter of 2017 compared with $21 million in the second quarter of 2017.   Operationally, sales prices improved, primarily for export sales, but sales volumes were lower due to production constraints resulting from planned maintenance outages. The Company recognized a non-cash after-tax foreign exchange gain of $7 million in the third quarter of 2017 ($0.02 per share), compared with a loss of $18 million in the second quarter of 2017 ($0.04 per share), primarily due to Ilim’s U.S. dollar denominated net debt.
more detail at:  http://internationalpaper2015.q4web.com/news-releases/press-r/2017/International-Paper-Reports-Third-Quarter-2017-Earnings/default.aspx

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