July 28, 2022 - International Paper today reported second quarter 2022 financial results.
"International Paper delivered strong revenue and earnings growth in the second quarter," said Mark Sutton, Chairman and Chief Executive Officer. "We performed well both commercially and operationally, which contributed to margin expansion despite a challenging supply chain and input cost environment. Looking ahead to the third quarter, we expect the realization of prior price movements to outpace higher input costs."
Sutton added, "Our Building a Better IP set of initiatives delivered $65 million of additional earnings improvement in the second quarter, for a total of $105 million through the first half of the year. Given this strong momentum, we are confident in achieving the high end of our full-year target."
Business segment operating profits are used by International Paper's management to measure the earnings performance of its businesses and is calculated as set forth in footnote (f) below under "Sales and Earnings by Business Segment". As a result of the spin-off of our global Printing Papers business on October 1, 2021, the Printing Papers business segment has been eliminated and all prior year amounts have been adjusted to reflect this business as a discontinued operation. For discussion of discontinued operations, see the disclosure under Discontinued Operations included later in this release. Second quarter 2022 net sales by business segment and operating profit (loss) by business segment compared with the first quarter of 2022 and the second quarter of 2021 are as follows:
Industrial Packaging operating profits (losses) in the second quarter of 2022 were $560 million compared with $397 million in the first quarter of 2022. In North America, earnings increased driven by higher sales prices for corrugated boxes and containerboard and lower planned maintenance outage expenses, partially offset by higher input costs, primarily for energy and freight. Sales volumes were stable for corrugated boxes and higher for export containerboard. Domestic containerboard volumes were lower. Earnings in the second quarter of 2022 benefited from insurance recoveries and other one-time items. In Europe, earnings improved reflecting higher average sales prices in the Eurozone and strong operating performance partially offset by seasonally lower sales volumes in Morocco.
Global Cellulose Fibers operating profits (losses) in the second quarter of 2022 were $25 million compared with $(49) million in the first quarter of 2022. Earnings improved significantly driven by higher sales prices for both fluff pulp and market pulp and lower planned maintenance outage expenses, partially offset by higher input costs, primarily for energy and chemicals. Sales volumes were slightly higher. Operating costs were lower, reflecting improved mill performance and seasonality.
Ilim joint venture equity earnings (losses) were $95 million in the second quarter of 2022 compared with $93 million in the first quarter of 2022. Operationally, earnings were stable as higher sales prices were mostly offset by higher input costs. The Company continues to actively explore strategic options with respect to the Ilim joint venture, including a sale of its 50% ownership interest.
Corporate expenses were $27 million for the second quarter of 2022, compared with $12 million in the first quarter of 2022.
The reported effective tax rate for the second quarter of 2022 was 19%, compared to a 2022 first quarter reported effective tax rate of 26%. The effective tax rate for the second quarter of 2022 was lower due to the tax-free exchange of a portion of the Company's shares of Sylvamo Corporation.
Excluding special items and non-operating pension expense, the operational effective tax rate for the second quarter of 2022 was 25%, compared with 27% for the first quarter of 2022. The higher operational effective tax rate in the first quarter is primarily due to reduced tax benefits for equity-based compensation.
Net special items in the second quarter of 2022 amount to a net after-tax gain of $17 million ($0.05 per diluted share) compared with a gain of $35 million ($0.09 per diluted share) in the first quarter of 2022 and a charge of $55 million ($0.14 per diluted share) in the second quarter of 2021.
International Paper's complete Second Quarter 2022 Results with tables can be found on the company's website: www.internationalpaper.com.
International Paper (NYSE: IP) is a leading global supplier of renewable fiber-based products. We produce corrugated packaging products that protect and promote goods, and enable worldwide commerce, and pulp for diapers, tissue and other personal care products that promote health and wellness. Headquartered in Memphis, Tennessee, IP employs approximately 38,000 colleagues globally. To learn more, visit: www.internationalpaper.com.
SOURCE: International Paper
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