Temple-Inland Posts 2nd Quarter Loss on Mill Downtime
July 27, 2010 - Temple-Inland Inc. today reported second quarter 2010 net income of $20 million, or $0.18 per diluted share, compared with a first quarter 2010 net loss of $4 million, or $0.04 per diluted share, and second quarter 2009 net income of $66 million, or $0.61 per diluted share. Second quarter 2010 net income excluding special items was $21 million, or $0.19 per diluted share.
Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, “In Corrugated Packaging, we realized the benefit of the January linerboard price increase in the quarter. However, the price increase benefit was partially offset by extended and unanticipated mill outages and unprecedented low inventory levels that negatively affected our financial performance in the quarter by approximately $20 million.
“An extended maintenance outage at our Rome, Georgia, mill and unscheduled outages of almost a week at our Maysville, Kentucky, and Newport, Indiana, mills due to third party utility interruptions negatively affected earnings in the quarter by approximately $11 million. The outages also affected inventories, which are at unprecedented low levels and well below our practical minimum. As a result, we were forced to make unscheduled outside purchases of containerboard and incur additional freight costs, negatively affecting earnings by an additional $9 million in the quarter.
“In Building Products, we returned to solid profitability in the quarter. In addition to higher prices, we benefited from our low cost structure. Results in this quarter provide insight into the earnings potential in this business.
“Looking ahead, we are positioned for a strong second half of the year in Corrugated Packaging as we will benefit from higher prices, box plant transformation and less mill maintenance downtime. Housing markets remain challenging, but we are well positioned in our Building Products business.”
Earnings improved in second quarter 2010 compared with first quarter 2010 primarily due to higher prices which were partially offset by increased downtime and related costs. Operating income declined in second quarter 2010 compared with second quarter 2009 due primarily to higher input costs.
Building Products operating results improved in second quarter 2010 compared with first quarter 2010 due to higher prices and volumes for all our products. Operating results improved in second quarter 2010 compared with second quarter 2009 due to higher lumber prices and higher volume for all our products.
Special items in the quarter were primarily an after-tax charge of $1 million related to facility closures in connection with Box Plant Transformation II.
SOURCE: Temple-Inland Inc.