International Paper Co.
) reported fourth quarter 2012 earnings of $235 million or 53
cents per share compared to $281 million or 65 cents per share in
the year-earlier quarter. Excluding one-time items, operating
earnings for the reported quarter were $305 million or 69 cents
per share versus $319 million or 73 cents per share in the
Although the operating earnings for fourth quarter 2012
decreased year over year, it surpassed the Zacks Consensus
Estimate by 5 cents.
For full year 2012, the company reported earnings of $794 million
or $1.80 per share compared to $1.3 billion or $3.03 per share in
the previous year. Operating earnings for 2012 stood at $1.2
billion or $2.65 per share compared to $1.4 billion or $3.12 per
share in the prior year. The operating earnings for the year well
exceeded the Zacks Consensus Estimate of $2.44.
Net sales for the reported quarter surged 10.9% year over year to
$7.1 billion and were in sync with the Zacks Consensus Estimate.
The healthy increase in quarterly sales was primarily
attributable to the accretive effect of the Temple-Inland
acquisition. For full year 2012, net sales were $27.8 billion
compared to $26.0 billion in 2011.
: Sales for this segment surged 34.7% year over year to $3.4
billion. Adjusted operating income increased to $368 million from
$316 million in the year-ago quarter, driven by improved pricing
in North America and seasonally higher sales volume in Europe.
: Sales increased marginally to $1.6 billion in the quarter,
while adjusted operating income dipped to $147 million from $190
million in the prior-year period. The segment performance was
negatively affected by higher planned outage-related maintenance
expenses, seasonally lower sales, and lower average sales price
for paper in North America.
: Sales decreased 9.9% year over year to $815 million, while
adjusted operating profit plummeted to $39 million from $62
million in the year-ago quarter. The year-over-year dip in
segment results was due to higher outage-related maintenance
expenses and lower average sales price.
Xpedx (Distribution Business)
: Sales for the segment dropped 5.8% year over year to $1.5
billion. Segment adjusted operating income decreased 66.67% to
$11 million, largely due to high operating expenses.
Cash and temporary investments dipped significantly to $1.3
billion at year-end 2012 compared with $4.0 billion in the
prior-year period. Cash flow from operating activities improved
to $3.0 billion during 2012 from $2.7 billion in the previous
year. Long-term debt increased to $9.7 billion from $9.2 billion
Mergers and acquisitions continue to be International Paper's key
strategy to strengthen its businesses over the long term. The
company's acquisition of Temple-Inland is expected to be highly
accretive beyond 2013. The combination will fortify the packaging
business of North America by increasing its share in the
corrugated packaging market to 34% from the current level of
Furthermore, through its joint ventures, International Paper
has significant projects underway in Russia and China, which will
help the company sustain its earnings growth.
CLEARWATER PAPR (CLW): Free Stock Analysis
INTL PAPER (IP): Free Stock Analysis Report
(KCDMY): ETF Research Reports
KAPSTONE PAPER (KS): Free Stock Analysis
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However, the company needs to be wary of stiff competition from
leading players in the industry like
Clearwater Paper Corporation
KapStone Paper and Packaging Corporation
Kimberly-Clark de M
), each carrying a Zacks Rank #2 (Buy). International Paper
currently retains a Zacks Rank #1 (Strong Buy).