The barrage of winter storms assailing the U.S. has had a
brutal impact on business at
). This was especially applicable to the company's operations in
the Southeast regions, as they lacked the infrastructure
facilities to cope with such weather adversities. The harsh
winter has cost the company $40 million to $50 million in January
and early February as approximately 40,000 tons of production
volumes are estimated to be lost due to lower demand and higher
energy prices. Adding to the weather woes are headwinds such as a
challenging macroeconomic environment, rising input costs and
contracting demand across its printing segment.
International Paper, a paper and packaging company with
operations in North America, Europe, Latin America, Russia, Asia
and North Africa, has been battling decreased paper demand
following the growing popularity of digital communication, which
has constrained revenue growth in the past few years.
In spite of reportedly weak demand and rising inventories along
with sluggish domestic macroeconomic conditions, International
Paper still reported record fourth-quarter earnings due to robust
growth in cardboard packaging for shipping, an overlooked element
of global digitization that actually benefits paper companies.
The company is also exploring the inorganic route for growth, as
evidenced by its acquisitions in the last year, with the most
recent being its merger agreement with Unisource Worldwide Inc.,
a distribution solution company.
While the company is still looking for profitable and growing
niches in the U.S., it has also tapped huge opportunities abroad,
becoming the second biggest supplier of coated paperboard in
China. International Paper's single largest investment outside
the U.S. is an enormous pulp plant in Siberia, home to vast
forests producing one-third of the world's soft wood, aiding in
production of kitchen towels and toilet paper to cater to the
budding demand from emerging countries.
Though International Paper currently holds a Zacks Rank #5
(Strong Sell), other stocks that look promising and are worth a
Resolute Forest Products Inc.
PH Glatfelter Co.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
GLATFELTER (GLT): Free Stock Analysis Report
INTL PAPER (IP): Free Stock Analysis Report
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