IP reports Q4 earnings decline

International Paper (IP), a paper packaging producer based in Memphis, Tennessee, has announced that it experienced a full-year and Q4 2020 net earnings loss of $482 million (or $1.22 per diluted share) and $153 million (or 39 cents per diluted share), respectively. Those figures compare with earnings of $1.2 billion (or $3.07 per diluted share) for full-year 2019 results and $204 million (or 52 cents per diluted share) in the third quarter of 2020 and $165 million (or 42 cents per diluted share) in the fourth quarter of 2019).

IP reports that its full.-year and fourth-quarter adjusted operating earnings were $1.1 million (or $2.80 per diluted share) and $296 million (or 75 cents per diluted share), respectively. The company says those figures compare with $1.8 billion (or $4.43 per diluted share) for full-year 2019, $280 million (or 71 cents per diluted share in the third quarter of 2020 and $430 million (or $1.09 per diluted share) in the fourth quarter of 2019.

The company states that fourth-quarter cash provided by operations was $789 million, bringing full-year 2020 cash to $3.1 billion compared with $3.6 billion for full-year 2019. The company had full-year 2020 free cash flow of $2.3 billion, which was the same in full-year 2019.

“Our performance while navigating through the impacts of the pandemic in 2020 reaffirms my admiration and appreciation for our employees and their on-going commitment to take care of each other and our customers,” says Mark Sutton, chairman and chief executive officer of International Paper. “Above all, the health and safety of our employees remains our most important responsibility.

He adds, “In terms of results, International Paper delivered solid earnings and outstanding cash generation in the fourth quarter and full-year 2020. Our performance demonstrates the strength and resilience of our employees, our diverse customer base and our world-class manufacturing and supply chain capabilities. In 2020, we returned $800 million to shareholders and reduced debt by $1.7 billion to enhance our financial strength, while continuing to strengthen our packaging business through targeted investments. As we enter 2021, we anticipate continued strong demand for corrugated packaging and pulp and are poised to grow earnings, as we take actions to build a better IP and accelerate value creation for our customers and shareholders.”

Segment breakdown

International Paper’s Industrial Packaging business unit operating profits were $431 million in the fourth quarter of 2020 compared with $469 million in the third quarter of 2020. In North America, IP reports that earnings decreased as higher sales volumes for boxes and lower planned maintenance outage expenses were more than offset by increased operating, distribution and input costs. In Europe, IP says earnings increased, driven by higher sales volumes, reflecting seasonability in Morocco and continued COVID-19 pandemic-related demand recovery in all regions. Average sales margins increased, primarily driven by continued improvement in Turkey, but operating costs were higher.

IP says its Global Cellulose Fibers segment experienced operating losses in the fourth quarter of 2020 of $114 million compared with losses of $59 million in the third quarter of 2020. The fourth quarter was affescted by seasonally higher operating costs and higher planned maintenance outage expenses, partially offset by lower economic downtime. The company says average sales prices were lower, and operating costs were negatively affected by the nonrepeat of favorable one-time items in the third quarter of 2020.

IP says its Printing Papers business segment had operating losses in the fourth quarter of 2020 of $80 million compared with $63 million in the third quarter of 2020. In North America, IP says earnings decreased driven by seasonally higher operating costs and higher input costs, partially offset by lower economic downtime and higher sales volumes, reflecting continued improvement from the negative demand impact of the COVID-19 pandemic. Average sales margins were slightly lower, reflecting an unfavorable mix. Planned maintenance outage expenses were lower. In Brazil, earnings increased arisig from higher sales volumes and lower economic downtime reflecting seasonality and continued recovery from the negative demand impacts of the COVID-19 pandemic. Average sales margins improved driven by a favorable geographic mix.

In Europe and Russia, earnings improved, driven by higher sales volumes, lower economic downtime and lower planned maintenance outage expenses, partially offset by higher operating costs.