IP’s Q3 earnings indicate healthy packaging demand

International Paper (IP), Memphis, Tennessee, reports that it achieved net earnings of $204 million, or 52 cents per diluted share, in the third quarter of the year compared with $266 million, or 67 cents per diluted share, in the second quarter of the year and $344 million, or 87 cents per diluted share, in the same time period in 2019.

According to the company’s third-quarter earnings report, IP achieved third-quarter adjusted operating earnings of $280 million, or 71 cents per diluted share, compared with $305 million, or 77 cents per diluted share, in the second quarter and $431 million, or $1.09 per diluted share, in the third quarter of 2019. International Paper reports that third-quarter cash provided by operations was $735 million $2.3 billion year to date compared with $2.7 billion year to date in the same time period of 2019. The company achieved a debt reduction of $760 million in the third quarter, bringing its year-to-date debt reduction to $1.1 billion.

“International Paper once again delivered solid results and generated strong cash from operations in a dynamic environment,” says Mark Sutton, chairman and chief executive officer of International Paper. “Our performance continues to demonstrate the strength of our customer solutions and the scale and flexibility of our system. As we enter the fourth quarter, we see continued momentum in demand for corrugated packaging, and we will again leverage the commercial and operating strengths of International Paper with a focus on cash generation and maintaining a strong balance sheet."

Sutton adds, “The health and safety of our employees remains our most important responsibility. I appreciate the dedication of our team members to safely produce and deliver the products people depend on every day.”

IP’s Industrial Packaging segment achieved operating profits of $469 million in the third quarter of 2020 compared with $449 million in the second quarter of the year. In North America, earnings increased reflecting higher sales volumes of boxes, lower economic downtime and lower recycled fiber costs, the company reports. Operating costs increased, driven by multiple weather events impacting International Paper’s mill system and seasonality in its box plants. The company says its planned maintenance outage expense was also higher in the third quarter of the year.

Within the Industrial Packaging segment, earnings benefited the third and second quarters from insurance recoveries related to a fire at an IP facility in Rome and a Bogalusa recovery boiler event. In Europe, earnings decreased driven by lower seasonal margins reflecting an unfavorable product mix and increased planned maintenance outage expenses at the company’s mill in Madrid. Sales volumes improved as the impacts of the COVID-19 pandemic showed some recovery in all regions at the end of the third quarter, partially offset by seasonally lower volumes in Morocco.