International Paper Company (IP) reported net income of $134 million or 32 cents per share in fourth-quarter 2014 compared with $436 million or 98 cents per share in the year-ago quarter. The fourth-quarter earnings included a non-cash foreign exchange charge of 40 cents per share.
The company reported net income of $555 million or $1.29 per share in full year 2014 compared with $1.4 billion or $3.11 per share in 2013.
Operating earnings (excluding one-time items) stood at 53 cents per share in the fourth quarter of 2014 compared with 81 cents per share in the year-ago quarter. The operating earnings in the reported quarter missed the Zacks Consensus Estimate of 60 cents.
Operating earnings (excluding one-time items) stood at $3.00 per share in full year 2014 compared with $3.06 per share in 2013. The full-year earnings missed the Zacks Consensus Estimate of $3.08 per share.
Net sales for the fourth quarter of 2014 were $5,943 million versus $5,848 million in the year-ago quarter and were above the Zacks Consensus Estimate of $5,872 million. The sales in the reported quarter were driven by strength in North America's box business.
For full-year 2014, revenues were $23,617 million compared with $23,483 million in the year-ago period.
Segment Performance
Industrial Packaging: Sales from this segment in the reported quarter stood at $3697 million versus $3,715 million in the year-ago period. Operating income came in at $379 million versus $473 million in the year-ago quarter. The year-over-year decrease was largely due to higher planned maintenance outage expenses, lower export prices and higher operating expenses.
Printing Papers: Sales were down 8.3% year over year to $1,440 million in the reported quarter, while operating income was $148 million versus loss of $47 million in the year-ago quarter.
Consumer Packaging: Sales from this segment was down 1.2% year over year to $855 million in the reported quarter. Operating profit was $51 million versus $30 million in the year-ago quarter.
Balance Sheet
Cash and temporary investments aggregated $1,881 million as of Dec 31, 2014 compared to $1,802 million as of Dec 31, 2013. Cash flow from operating activities for twelve months ended Dec 31, 2014 was $3,077 million compared to $3,028 million in the year-ago period. Long-term debt stood at $8,631 million as of Dec 31, 2014 compared to $8,827 million as of Dec 31, 2013.
International Paper recorded Ilim joint venture equity loss of $136 million for the reported quarter, compared with equity loss of $70 million in third-quarter 2014. Operating earnings improved quarter over quarter, reflecting higher sales volumes, strong operations and margin expansion.
Xpedx Spin-off
On Jul 1, 2014 the company completed its Xpedx spin-off. In Jan 2014, International Paper announced that its distribution business xpedx will merge with a distribution solution company, Unisource Worldwide, Inc., to form a new publicly traded company Veritiv. International Paper received $400 million in cash and holds 51% stake of the new company, with UWW Holdings owning the remaining stake.
The spin-off is part of International Paper’s restructuring strategy to discard its non-core operations and focus on its core industrial-packaging businesses. The newly formed publicly traded company is expected to create an enhanced platform for profitable growth across packaging, print and facility solutions.
Outlook
International Paper is the world's leading producer of containerboards used to make corrugated brown boxes for shipping goods. It continues to focus on growing free cash flow, increasing return on capital and returning cash to its shareholders.
International Paper currently has a Zacks Rank #3 (Hold). Other stocks that look promising and are worth a look include Sealed Air Corp. (SEE) carrying a Zacks Rank #1 (Strong Buy), Fibria Celulose SA (FBR) and Mercer International Inc. (MERC), both carrying a Zacks Rank #2 (Buy).
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