Cardboard box materials maker International Paper Co. (IP), in its third-quarter preliminary results, reported a profit that more than doubled from last year, helped by an alternative fuel credit. However, earnings per share before special items fell from last year, yet came in above the Street expectations.
Q3 Results
The Memphis, Tennessee-based company's net income attributable to International Paper Co. was $371 million or $0.87 per share, compared to $149 million or $0.35 per share in the prior year quarter.
Income from continuing operations was $377 million, up from $152 million in the corresponding quarter of the previous year.
The company said its latest quarter included a $525 million pre-tax credit for alternative fuel mixture credits earned under the alternative fuel program, a $18 million pre-tax charge for integration costs associated with the Industrial Packaging business integration, and a pre-tax charge of $151 million for restructuring and other charges.
Special items recognised in the third quarter of 2008 mainly included a $107 million pre-tax charge to write down the assets of the Inverurie, Scotland mill to its estimated fair value. Also included was a $155 million of pretax restructuring and other charges.
Earnings from continuing operations, excluding special items, totaled $157 million or $0.37 per share, lower than $356 million or $0.84 per share in the same quarter of last year.
On average, 14 analysts polled by Thomson Reuters expected the company to report $0.24 per share. Analysts' estimates typically exclude special items.
Quarterly net sales for the recent quarter declined to $5.9 billion from the previous year's $6.8 billion. Eleven Wall Street analysts had consensus revenue estimate of $5.89 billion.
Cost of products sold fell to $3.76 billion from $5.15 billion reported in the comparable quarter of the previous year.
Liner Of Businesses
The company's Industrial Packaging division posted sales of $2.23 billion, down from $2.32 billion in the year-ago quarter. Segment operating profit rose to $410 million from $95 million in 2008.
Printing Papers unit generated sales of $1.47 billion, lower than last year's $1.8 billion, and segment operating profit advanced to $363 million from $103 million earned in the comparable quarter of the previous year.
Third-quarter sales for the consumer Packaging segment were $790 million, down from $830 million in the same quarter of last year, while segment operating profit was $144 million as against loss of $2 million reported in the three months ended September 30, 2008. The company's distribution business reported sales of $1.66 billion versus $2.07 billion last year, and posted an operating profit of $21 million, down from $35 million a year ago.
Forest Products segments' sales fell to $5 million from $55 million last year, while segment operating profit totaled $2 million, compared to $305 million reported in the previous year.
Nine-month Results
For the nine-month period, net income attributable to International Paper Co. was $764 million or $1.79 per share versus $509 million or $1.20 per share a year ago. Earnings from continuing operations, excluding special items, totaled $277 million or $0.65 per share, compared to $766 million or $1.80 per share in the same quarter of last year. Year-to-date, net sales declined to $17.34 billion from $18.28 billion in the same period last year.
Peer Performance
Among International Paper's rivals, the Glen Allen, Virginia-based MeadWestvaco Corp. (MWV) reported third-quarter net income of $128 million or $0.74 per share, compared to $54 million or $0.31 per share in the prior year quarter. Net sales for the quarter decreased to $1.63 billion from $1.81 billion a year earlier.
Another peer, Weyerhaeuser Co. (WY) is scheduled to announce third-quarter results before market opens on October 30. Analysts expect the company to report a loss of $0.45 per share on revenues of $1.42 billion.
Stock Movement
International Paper shares, which have trading between $3.93 and $25.40 in the past 52 weeks, closed Tuesday's trading session at $22.63.
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