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International Paper Company Reports Operating Results (10-Q)

August 07, 2012 | About:
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10qk

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International Paper Company (IP) filed Quarterly Report for the period ended 2012-06-30.

International Paper Company has a market cap of $14.3 billion; its shares were traded at around $33.4165 with a P/E ratio of 12.5 and P/S ratio of 0.6. The dividend yield of International Paper Company stocks is 3.2%. International Paper Company had an annual average earning growth of 3.3% over the past 10 years.

Highlight of Business Operations:

2012: As referenced in Note 6, on July 2, 2012, International Paper finalized the sales of its Ontario and Oxnard (Hueneme), California containerboard mills to New-Indy Containerboard LLC, and its New Johnsonville, Tennessee containerboard mill to Hood Container Corporation. A pre-tax charge of $9 million ($5 million after taxes) was recorded during the three months ended June 30, 2012 for costs associated with the divestiture of these three containerboard mills. Also, in anticipation of the divestiture of the Hueneme mill in Oxnard, California, a pre-tax charge of $62 million ($38 million after taxes) was recorded during the three months ended June 30, 2012 to adjust the long-lived assets of the mill to their fair value. The assets of these mills, totaling $470 million at June 30, 2012, are included in Assets of businesses held for sale in current assets in the accompanying consolidated balance sheet at June 30, 2012.

Printing Papers net sales for the second quarter of 2012 were 3% lower than in the first quarter of 2012 and 5% lower than in the second quarter of 2011. Operating profits in the second quarter of 2012 and first quarter of 2012 included a $2 million charge and a $1 million gain, respectively, associated with the acquisition of a majority share of Andhra Pradesh Paper Mills Limited. Operating profits in the second quarter of 2011 included a $21 million gain associated with a change in estimated closure costs related to the repurposing of the Franklin mill. Excluding these items, operating profits in the second quarter of 2012 were 27% lower than in the first quarter of 2012 and 52% lower than in the second quarter of 2011.

Consumer Packaging net sales in the second quarter of 2012 were 4% lower than in the first quarter of 2012 and 17% lower than in the second quarter of 2011. Operating profits included charges of $6 million and a gain of $7 million in the second quarter of 2012 and first quarter of 2012, respectively, related to the sale of the Shorewood business. Operating profits in the second quarter of 2011 included a charge of $129 million for a fixed asset impairment of the North American Shorewood business and charges of $2 million related to the reorganization of the Shorewood business. Excluding these items, operating profits in the second quarter of 2012 were 34% lower than in the first quarter of 2012 and 36% lower than in the second quarter of 2011.

Distribution net sales in the second quarter of 2012 were 2% higher than in the first quarter of 2012 but 9% lower than in the second quarter of 2011. Operating profits included $12 million, $21 million and $10 million in the second quarter of 2012, the first quarter of 2012 and the second quarter of 2011, respectively, of costs related to the reorganization of the Companys xpedx operations. Excluding these items, operating profits in the second quarter of 2012 were 11% lower than in the first quarter of 2012 and 21% higher than in the second quarter of 2011.

Sales of papers and graphic arts products in the second quarter of 2012 totaled $860 million compared to $850 million in the first quarter of 2012 and $1.0 billion in the second quarter of 2011. Trade margins as a percent of sales for printing papers decreased from the first quarter of 2012 and the second quarter of 2011 due to shifts between warehouse sales and lower-margin sales shipped directly from the manufacturer. Packaging sales were $400 million in the second quarter of 2012, unchanged from the first quarter of 2012 and second quarter of 2011. Trade margins as a percent of sales for packaging products decreased from the first quarter of 2012 and increased from the second quarter of 2011 reflecting a change in mix. Sales of facility supply products totaled $240 million in the second quarter of 2012, compared to $225 million in the first quarter of 2012 and $250 million in the second quarter of 2011.

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