Demand and earnings hold steady for International Paper

By Rory Harrington

- Last updated on GMT

John Faraci, CEO and chairman of International Paper
John Faraci, CEO and chairman of International Paper
International Paper (IP) has posted strong full year results - despite a weaker fourth quarter – as demand across its packaging operations held up in 2011.

The US-based board and paper giant said efficiency efforts across its global business coupled with growth in emerging markets had fuelled gains.

Rolling out a list of figures, the company reported full year sales on US$26bn, realizing an operating profit of $2.2bn – both up compared to 2010.

Net sales in Q4 were $6.4bn - a slight year-on-year drop – while operating profits for the three months ending 31 December rose $16m to $577m.

"Margin expansion across our global operations, as well as growth in emerging markets, contributed to a solid fourth quarter and drove IP’s performance throughout 2011,”​ said company chairman and CEO John Faraci. “Sustaining positive momentum in an uneven global economy is challenging but over the full course of the year ahead we remain confident in our ability to continue to execute at a high level.”

Packaging demand

In its industrial packaging segment Q4 operating earnings were $306m, a small increase on the previous quarter. This was due to strong mill operations, lower US recycling costs for fibre and improved margins and volumes in Europe, said the firm. Full year operating profits for the unit were $1.1bn – a year-on-year jump of nearly 30%.

Volumes for industrial packaging reached almost 1.4bn tonnes in Q4 and just under 14bn tonnes for the full year – both largely the same as 2010.

Earnings from consumer packaging fell from $103m in Q3 to $66m in the final quarter on increased maintenance outage as well as seasonally weak US and export demand for coated paperboard. Lower pricing in Europe and China was also a major factor and was only partially offset by lower input costs.

Top line operating profits for the full year of $364m were hit hard by net losses on sales and impairments of business of $199m to leave a final figure of $163m.

Consumer packaging volumes rose slightly in the fourth quarter to 701m tonnes and to almost 2.9bn tonnes for the full 12 month.

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