July 29, 2021 - International Paper today reported second quarter 2021 financial results.
SECOND QUARTER 2021 HIGHLIGHTS
"International Paper delivered solid earnings growth and strong cash generation in the second quarter," said Mark Sutton, Chairman and Chief Executive Officer. "Commercially, we achieved strong revenue growth, while executing well in a very challenging supply chain and input cost environment. Looking ahead to the third quarter, we expect demand to remain strong and margins to expand meaningfully as realization of prior price movements outpaces input and transportation costs, and we step down from our highest maintenance outage quarter."
Sutton added, "We continue to make excellent progress on the spin-off of our papers business, which we expect to complete on October 1st. Our team is doing an outstanding job managing complexity. I appreciate their commitment to execute well and take care of each other and our customers as we work together to build a better IP."
Industrial Packaging operating profits (losses) in the second quarter of 2021 were $408 million compared with $447 million in the first quarter of 2021. In North America, higher sales prices for boxes and export containerboard were more than offset by higher planned maintenance outage expenses and input costs, primarily driven by higher recovered fiber and chemicals costs. Operating costs were impacted by severely low containerboard inventories and a stressed transportation environment. In Europe, earnings were lower reflecting seasonally lower volumes in Morocco and lower average sales margins driven by higher containerboard costs.
Global Cellulose Fibers operating profits (losses) in the second quarter of 2021 were $10 million compared with $(82) million in the first quarter of 2021. Earnings improved significantly driven by higher average sales prices and lower planned maintenance outage expenses slightly offset by higher distribution costs.
Printing Papers operating profits (losses) in the second quarter of 2021 were $76 million compared with $80 million in the first quarter of 2021. In North America, higher average sales prices, higher volumes and lower economic downtime were mostly offset by higher planned maintenance outage expenses. In Brazil, earnings were stable as higher average sales prices and an improved geographic mix were offset by higher input costs and the non-repeat of favorable foreign currency impacts. In Europe and Russia, earnings were lower as higher average sales prices and lower economic downtime costs were more than offset by higher planned maintenance outage expenses. The Printing Papers business carries strong momentum from its first half 2021 performance as we approach the October 1, 2021 spin-off.
EQUITY METHOD INVESTMENTS
Ilim joint venture equity earnings (loss) were $101 million in the second quarter of 2021 compared with $49 million in the first quarter of 2021. Operationally, earnings increased driven by higher export and domestic sales prices for softwood pulp, hardwood pulp and containerboard and higher sales volumes. These benefits were partially offset by higher distribution, input and operating costs.
Graphic Packaging equity earnings (loss) were $3 million in the second quarter of 2021, compared with $1 million in the first quarter of 2021. We monetized our remaining ownership position in the second quarter of 2021.
Corporate expenses were $7 million for the second quarter of 2021, compared with $25 million in the first quarter of 2021.
EFFECTIVE TAX RATE
The reported effective tax rate for the second quarter of 2021 was 24%, compared to a 2021 first quarter reported effective tax rate of 25%. The tax rate in second quarter is lower primarily due to a discrete period tax benefit of $15 million related to the adjustment of the tax depreciation method for certain of the Company's fixed assets. This adjustment was partially offset by the tax rate differential associated with a foreign value-added tax credit accrual.
Excluding special items and non-operating pension expense, the operational effective tax rate for the second quarter of 2021 was 21%, compared with 24% for the first quarter of 2021. The lower operational effective tax rate in the second quarter is primarily due to a discrete period benefit of $15 million related to the adjustment of the tax depreciation method for certain of the Company's fixed assets.
IP's complete second quarter 2021 report is available at: www.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. IP, headquartered in Memphis, Tennessee, employs approximately 48,000 colleagues and serves more than 25,000 customers in 150 countries. Net sales for 2020 were $21 billion. To learn more, visit: www.internationalpaper.com.
SOURCE: International Paper
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