* Adj EPS 57 cents vs. Street forecast 50 cents
* Sales up nearly 5 percent to $6.66 billion; miss Street
* CEO says feels “very good about the rest of the year”
* Already saved $100 mln on freight after Temple deal – CEO
* Shares up 0.7 percent in morning trading
By Ernest Scheyder
April 27 (Reuters) – International Paper Co, which
acquired rival packaging maker Temple-Inland Inc in February,
posted a better-than-expected quarterly profit on strong sales
of shipping boxes and paper.
The company, which operates around the world and became the
largest North American producer of corrugated packaging in the
buyout, said pockets of weakness remain — especially in Europe
— but signs of recovery are emerging.
“I feel very good about the rest of the year,” Chief
Executive John Faraci said in an interview on Friday. “It’s not
a macro-bullish story. It’s a macro-positive story.”
North America is “sluggishly slow, but positive;” Europe
likely will be in a “shallow” recession for the rest of the
year; and China and India’s economies are “slowing down a bit,
but still have strong GDP growth,” Faraci said.
For the first quarter, International Paper posted net income
of $188 million, or 43 cents per share, compared with $281
million, or 65 cents per share, in the year-ago quarter.
Excluding restructuring charges and other one-time items,
the company posted profit of 57 cents per share.
By that measure, analysts had expected earnings of 50 cents
per share, according to Thomson Reuters I/B/E/S.
Revenue rose 4.6 percent to $6.66 billion. Analysts had
expected $6.79 billion in revenue.
Sales of corrugated packaging boxes, which are primarily
used for shipping by Amazon.com Inc and other
customers, rose 22 percent to $3.12 billion.
Sales of printing papers rose 2 percent to $1.56 billion.
The company did see weakness in its distribution unit due to
a drop in volume shipped. Sales in that unit fell 12 percent to
$1.48 billion.
Shares of IP rose 0.7 percent to $33.97 in Friday morning
trading. The stock has traded between $21.55 and $36.50 in the
past 52 weeks.
TEMPLE BUYOUT
IP’s $3.7 billion buyout of Temple in February — seven
months after the company’s initial $3.3 billion offer was
rejected — came after a lengthy review by the U.S. Department
of Justice.
When the deal closed, IP said it expected to save about $300
million over two years.
After only six weeks IP has saved $100 million in shipping
and other costs in its box plant operations — the lion’s share
of IP’s business with 60 plants, Faraci said.
“Temple’s freight cost was 50 percent more than ours to ship
corrugated packaging around the country,” Faraci said. “We’ve
already figured out how to take about $100 million out of that
freight bill.”
That number doesn’t even factor in mills or office
operations, Faraci said.
Elsewhere Friday, IP rival Weyerhaeuser Co posted a
better-than-expected quarterly profit.
