International Paper reports “okay” quarter
John Faraci, chairman and chief executive officer, described the market conditions as “steady”, during the firm reporting their Q1 financial results for the period ending 31 March and added he would frame the quarter as "okay".
The firm said it expects to record start-up costs around $20m-$30m for the Ilim joint venture with full operation and commercial ramp-up of the pulp line in Bratsk and the paper machine and sheeting operations at Koryazhma in the next six to eight weeks.
Industrial Packaging posted solid results driven by improved pricing and synergies but the overall performance in the quarter was muted by seasonally slow demand across global operations, weak earnings from xpedx and an unfavorable foreign exchange swing at the joint venture, Ilim.
Consumer Packaging results
Consumer Packaging operating profit was $51m ($7m including special items), compared with $39m ($41m including special items) in the fourth quarter of 2012.
Lower scheduled maintenance expenses in North America were partially offset by higher operating costs primarily related to an unplanned reliability issue in January on the digester at the Augusta, Georgia coated paperboard mill.
Restructuring and other charges included pre-tax charges of $44m ($27m after taxes) for costs related to the permanent shutdown of a paper machine at the Augusta, Georgia mill.
The shutdown removed 12,000 tons of capacity in the quarter to effectively balance coated paperboard capacity with customer demand.
Industrial Packaging outlook
Industrial Packaging posted operating profits of $369m ($355m including special items) in the first quarter of 2013, compared to $368m ($336m including special items) in the fourth quarter of 2012.
In North America, higher selling prices for boxes and containerboard were partially offset by seasonally slow demand, higher input costs and $16m in incremental scheduled outage expenses.
First quarter segment results include consolidated earnings for Orsa International Paper Embalagens S.A. for the period 15 January through 28 February.
Faraci said: "Looking ahead, peak annual maintenance outage spending and expansion project ramp-up costs at Ilim will impact the second quarter.
“Earnings runway from our strategic projects and announced pricing initiatives will position the company to deliver step-change financial performance in the second half of 2013, regardless of what looks to be a continued slow and uneven global economy.”
