International Paper Reports Third Quarter 2020 Results
"International Paper once again delivered solid results and generated strong cash from operations in a dynamic environment." – Mark Sutton, Chairman and CEO of International Paper.
Oct. 29, 2020 - International Paper (NYSE: IP) today reported third quarter 2020 financial results. THIRD QUARTER 2020 HIGHLIGHTS
"International Paper once again delivered solid results and generated strong cash from operations in a dynamic environment," said Mark Sutton, Chairman and Chief Executive Officer. "Our performance continues to demonstrate the strength of our customer solutions and the scale and flexibility of our system. As we enter the fourth quarter, we see continued momentum in demand for corrugated packaging, and we will again leverage the commercial and operating strengths of International Paper with a focus on cash generation and maintaining a strong balance sheet." Sutton added, "The health and safety of our employees remains our most important responsibility. I appreciate the dedication of our team members to safely produce and deliver the products people depend on every day." SEGMENT INFORMATIONIndustrial Packaging operating profits in the third quarter of 2020 were $469 million compared with $449 million in the second quarter of 2020. In North America, earnings increased reflecting higher sales volumes for boxes, lower economic downtime and lower recycled fiber costs. Operating costs increased, driven by multiple weather events impacting our mill system and seasonality in our box plants. Planned maintenance outage expenses were also higher. Earnings benefited in both the third and second quarter of 2020 from insurance recoveries related to the Rome fire and Bogalusa recovery boiler event. In Europe, earnings decreased driven by lower seasonal margins reflecting an unfavorable product mix and increased planned maintenance outage expenses at our Madrid, Spain mill. Sales volumes improved, as the impacts of the COVID-19 pandemic showed some recovery in all regions at the end of the third quarter, partially offset by seasonally lower volumes in Morocco. Operating costs were lower, driven by solid operational performance and cost management. Global Cellulose Fibers operating profits (losses) in the third quarter of 2020 were $(59) million compared with $(10) million in the second quarter of 2020. The third quarter was impacted by higher planned maintenance outage expenses and economic downtime. Average sales prices were higher. Sales volumes were seasonally lower and reflect slower COVID-19 pandemic related consumer demand. Operating costs were lower driven by seasonality and favorable one-time items in the third quarter of 2020. Input costs were higher, primarily for wood and energy. Printing Papers operating profits (losses) in the third quarter of 2020 were $63 million compared with $(11) million in the second quarter of 2020. In North America, earnings increased driven by higher sales volumes and lower economic downtime reflecting signs of recovery from the unprecedented demand impact of the COVID-19 pandemic. Average sales margins were slightly lower, reflecting an unfavorable mix. Operating and input costs were stable. Planned maintenance outage expenses were also lower. In Brazil, earnings increased due to higher sales volumes and lower economic downtime reflecting signs of recovery from the demand impacts of the COVID-19 pandemic. These benefits were partially offset by lower average sales margins primarily driven by lower export sales prices and an unfavorable geographic mix. In Europe and Russia, earnings improved but continue to be impacted by the COVID-19 pandemic. Sales volumes increased in Russia and were stable in Europe. Economic downtime was lower. Average sales margins decreased, reflecting lower sales prices and an unfavorable mix. Operating costs were lower, partially offset by higher maintenance outage costs. EQUITY METHOD INVESTMENTSIlim joint venture equity earnings (loss) were $(33) million in the third quarter of 2020 compared with $63 million in the second quarter of 2020. Operationally, earnings decreased primarily driven by higher planned maintenance outage expenses. Lower export and domestic sales prices for hardwood pulp, softwood pulp and paper were mostly offset by higher sales volumes to China. The Company recognized a non-cash after-tax foreign exchange loss of $55 million in the third quarter of 2020 ($0.14 per diluted share), compared with a gain of $34 million in the second quarter of 2020 ($0.09 per diluted share), primarily due to Ilim's U.S. dollar denominated net debt. Graphic Packaging equity earnings on our 14.8% ownership position were $11 million in the third quarter of 2020, compared with $11 million in the second quarter of 2020. CORPORATE EXPENSESCorporate expenses (income) were $(20) million for the third quarter of 2020, compared with $(3) million in the second quarter of 2020. EFFECTIVE TAX RATEThe reported effective tax rate for the third quarter of 2020 was 18%, compared to a 2020 second quarter reported effective tax rate of 26%. Excluding net special items and non-operating pension expense, the operational effective tax rate for the third quarter of 2020 was 19%, compared with 26% for the second quarter of 2020. Both the reported and operational effective tax rates are lower in the third quarter as a result of tax benefits recognized after the finalization of the 2019 U.S. Federal income tax return. The tax benefits recorded in the third quarter are primarily related to increased U.S. research and development tax credits and lower than estimated U.S. income taxes on foreign earnings. International Paper's complete third quarter earnings report can be found on the company's website: internationalpaper.com. International Paper (NYSE: IP) is a leading global producer of renewable fiber-based packaging, pulp and paper products with manufacturing operations in North America, Latin America, Europe, North Africa and Russia. We produce corrugated packaging products that protect and promote goods, and enable world-wide commerce; pulp for diapers, tissue and other personal hygiene products that promote health and wellness; and papers that facilitate education and communication. We are headquartered in Memphis, Tenn., employ more than 50,000 colleagues and serve more than 25,000 customers in 150 countries. Net sales for 2019 were $22 billion. For more information, visit: internationalpaper.com. SOURCE: International Paper |