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IP tops 3Q forecasts
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October 17, 2001: 11:53 a.m. ET
Paper company sees profit, sales fall but nearly triples EPS forecast.
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NEW YORK (CNNfn) - International Paper's third-quarter earnings slid 74 percent from a year ago yet beat Wall Street's lowered expectations for the period as costs were cut through slower production and plant closures, the company said Wednesday.
The Stamford, Conn.-based paper products company earned $68 million, or 14 cents a diluted share, excluding special items in the period. That was down from $260 million, or 53 cents a share, on the same basis a year earlier. Analysts surveyed by earnings tracker First Call were looking for earnings per share of only 5 cents a share.
Including special items related to the sale of assets, the company posted a net loss of $275 million, or 57 cents a share for the quarter.
Sales fell even more steeply than expected to $6.5 billion from $7.8 billion a year earlier. First Call's revenue forecast was for sales of $6.9 billion in the period.
Shares of International Paper (IP: down $0.30 to $37.30, Research, Estimates), a component of the Dow Jones industrial average, fell 10 cents to $37.50 in Wednesday morning trading.
Fewer orders from the advertising, print, packaging and construction industries is driving the slower demand as the economic slowdown that began about a year ago was made worse after the Sept. 11 terrorist attacks on the World Trade Center and the Pentagon, the company said.
Though the company continues to streamline operations, as with the permanent shuttering of its Erie, Pa. plant, it is still assessing the full impact of the attacks on future earnings and sales.
Closing the Erie plant resulted in terminating 760 jobs.The company cut 3,000 management jobs this summer and closed a Mississippi paper mill in an effort to streamline its operations to keep output in line with softened customer demand. IP set a goal of selling up to $5 billion of non-core assets within the next couple of years to pay down debt, which had increased significantly in 2000 to fund acquisitions such as the purchase of Champion International. Since then, performance has been weakened not only by a slowdown in demand, but also by high energy costs and the strength of the U.S. dollar, which has crimped exports.
Printing and papers segment earnings came in at $146 million in the quarter, higher than in the second quarter as a result of higher demand for coated paper used in holiday catalogs.
Industrial and consumer packaging earnings fell to $133 million in the third quarter from $143 million in the second quarter.
Results at xpedx, the company's distribution business, fell to $5 million from $12 million in the second quarter.
Forest products earnings totaled $184 million, flat compared with the second quarter.
Carter Holt Harvey, the New Zealand subsidiary in which International Paper holds a 50.5 percent stake, posted a $1 million loss compared with $5 million profit in the second quarter. 
from staff and wire reports
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