Leading packaging and paper manufacturer
International Paper Company
) recently announced its plans to shutdown the Courtland, Ala.,
paper mill manufacturing facility owing to decelerating demand
for uncoated freesheet across the continent. The phased closure
is likely to be completed by the end of first quarter 2014.
The mill produced papers for diverse applications like forms,
envelopes, labels, copiers, printers and magazines. With
increased digitalization, consumers shifted to online
publications, electronic billing and filing, due to which demand
for uncoated freesheet in North America fell drastically.
With the permanent shutdown of the facility, International
Paper's North American uncoated and coated freesheet paper
production capacity will reduce by 950,000 tons, including
765,000 tons of uncoated freesheet.
Going forward, International Paper's Printing and Communications
Papers Business, of which the Courtland mill used to be a part,
will comprise four paper mills focused on uncoated freesheet,
bristols and specialty papers markets. These include two uncoated
freesheet paper mills in Eastover, S.C. and Riverdale, Ala., and
two specialty paper mills in Georgetown, S.C. and Ticonderoga,
The strategic decision is likely to affect the livelihood of
1,100 mill employees, both contractual and salaried.
International Paper will work in unison with the union officials
to fairly compensate the employees through severance packages,
outplacement assistance, benefits and other assistance programs.
Related to the planned closure, International Paper will record
$550 million in pre-tax non-cash asset write-off and accelerated
depreciation charges and $125 million in pre-tax cash severance
and other shutdown charges during the remainder of 2013 and in
Headquartered in Memphis, Tenn., International Paper has
manufacturing operations in North America, Europe, Latin America,
Russia, Asia, and North Africa. The company employs approximately
70,000 people and is strategically located in more than 24
countries serving customers worldwide.
International Paper is currently working toward transforming and
improving the profitability of its distribution business, xpedx.
Improvements are expected in procurement, replenishment orders,
reduced stock keeping Units (SKU), and supply chain (including
fewer/larger warehouses). The company is also mulling to
integrate the entire platform into a single operating system. All
these initiatives are expected to double profits. Started in
2011, the company is at the initial stages of this multi-year
program. We believe that these initiatives will boost results and
be accretive to earnings going forward.
International Paper presently has a Zacks Rank #3 (Hold). Other
players in the market worth mentioning include
KapStone Paper and Packaging Corporation
), carrying Zacks Rank #1 (Strong Buy), and
PH Glatfelter Co.
), both carrying a Zacks Rank #2 (Buy).
GLATFELTER (GLT): Free Stock Analysis Report
INTL PAPER (IP): Free Stock Analysis Report
KAPSTONE PAPER (KS): Free Stock Analysis
ROCK-TENN CO (RKT): Free Stock Analysis
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