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International Paper sees Q3 earnings dip, but sales up over Q2

International Paper has reported its third-quarter results, citing net earnings of $204 million ($0.52 per diluted share), compared with $266 million ($0.67 per diluted share) in the second quarter of 2020 and $344 million ($0.87 per diluted share) in the third quarter of 2019.

Third quarter adjusted operating earnings were $280 million ($0.71 per diluted share) compared with $305 million ($0.77 per diluted share) in the second quarter of 2020 and $431 million ($1.09 per diluted share) in the third quarter of 2019.

Net sales for the quarter were at $5.1 billion, up from $4.8 billion in the second quarter of 2020, but down from $5.5 billion in Q3 2019.

Third quarter cash provided by operations was $735 million and year-to-date of $2.3 billion compared with $2.7 billion year-to-date in the same period of 2019.

“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, in a statement.

“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.

“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.”

Industrial packaging

Industrial packaging operating profits in the third quarter of 2020 were $469 million compared with $449 million in the second quarter of 2020.

In North America, earnings increased reflecting higher sales volumes for boxes, lower economic downtime and lower recycled fibre costs.

Operating costs increased, driven by multiple weather events impacting the company’s mill system and seasonality in our box plants.

Planned maintenance outage expenses were also higher. Earnings benefited in both the third and second quarter of 2020 from insurance recoveries related to the Rome fire and Bogalusa recovery boiler event.

In Europe, earnings decreased driven by lower seasonal margins reflecting an unfavourable product mix and increased planned maintenance outage expenses at International Paper’s Madrid, Spain mill.

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. Operating costs were lower, driven by solid operational performance and cost management.

Global cellulose fibres

Global cellulose fibres operating profits (losses) in the third quarter of 2020 were $(59) million compared with $(10) million in the second quarter of 2020.

The third quarter was impacted by higher planned maintenance outage expenses and economic downtime. Average sales prices were higher. Sales volumes were seasonally lower and reflect slower COVID-19 pandemic related consumer demand.

Operating costs were lower driven by seasonality and favourable one-time items in the third quarter of 2020. Input costs were higher, primarily for wood and energy.

Printing papers

Printing papers operating profits (losses) in the third quarter of 2020 were $63 million compared with $(11) million in the second quarter of 2020.

In North America, earnings increased driven by higher sales volumes and lower economic downtime reflecting signs of recovery from the unprecedented demand impact of the COVID-19 pandemic.

Average sales margins were slightly lower, reflecting an unfavourable mix. Operating and input costs were stable. Planned maintenance outage expenses were also lower.

In Brazil, earnings increased due to higher sales volumes and lower economic downtime reflecting signs of recovery from the demand impacts of the COVID-19 pandemic.

These benefits were partially offset by lower average sales margins primarily driven by lower export sales prices and an unfavourable geographic mix.

In Europe and Russia, earnings improved but continue to be impacted by the COVID-19 pandemic. Sales volumes increased in Russia and were stable in Europe. Economic downtime was lower.

Average sales margins decreased, reflecting lower sales prices and an unfavourable mix. Operating costs were lower, partially offset by higher maintenance outage costs.

Read the full International Paper Q3 2020 financial report.