IP Sets Goals for 2020 - Analyst Blog


International Paper ( IP ) has set voluntary goals to become more sustainable by 2020. These goals have been included in the recently released Sustainability Report for 2011.

Trying to fulfill its myriad commitments, the company is all set to improve energy efficiency in purchased energy use by 15%. Besides, it is also keen on reducing global GHG emissions (Scope 1 and 2) associated with the manufacturing of products by 20%. Further, it seeks to increase third party certified fiber volume by 15% worldwide.

In addition, the company has also addressed other issues related to fiber certification, philanthropy, safety and water use. International Paper achieved several sustainability goals in 2011. These included utilizing renewable biomass to produce 71% of paper mill energy worldwide along with decreasing total safety incident rate to its lowest rate.

International Paper, which has been conferred with many awards, has donated more than $11 million for charity in 2011. Recently, the company introduced 100% recycled paper for its North American customers. The paper called Hammermill Great White 100 joins the company's 30% and 50% recycled paper offerings.

With the acquisition of Andhra Pradesh Paper Mills in India, International Paper became the first non-Indian forest products company to enter the Indian market. The company has been providing seedlings to the local tree farmers.

The company's recent acquisition of Texas-based Temple-Inland is its largest since the August 2008 acquisition of Weyerhaeuser Co.'s corrugated-packaging business. The transaction is expected to be accretive to earnings within 12 months of closing and highly accretive beyond 2013.

However, given the magnitude of the combined entity, integration risks continue to be a challenge. Moreover, its debt levels still remain high. It was further aggravated by the issue of debt to fund the Temple-Inland acquisition. The debt-to-capitalization ratio increased to 59.9% as of December 31, 2011, from 53.3% as of September 30, 2011.

International Paper competes with companies like MeadWestvaco Corporation ( MWV ) and Weyerhaeuser Co. ( WY ). Currently, we have a long-term Neutral recommendation on the stock, which is in line with the short-term Zacks #3 Rank (Hold).

INTL PAPER (IP): Free Stock Analysis Report
MEADWESTVACO CP (MWV): Free Stock Analysis Report

WEYERHAEUSER CO (WY): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: IP , MWV , WY



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