Pulp and Paper Canada

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IP hammered by high input costs


February 2, 2006
By Pulp & Paper Canada

Earnings may have been up, but International Paper still posted a fourth quarter loss of $77 million. The company r…

Earnings may have been up, but International Paper still posted a fourth quarter loss of $77 million. The company reported full-year net earnings of $1.1 billion, which compares to a loss of $35 million in 2004.

“Input costs skyrocketed in the fourth quarter, especially in October and November,” said chairman and CEO John Faraci. “They were above the already high year-to-date levels, this put a big dent in our margins.”

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The usual culprits were fingered with blame for the loss. “For 2005, in total, high costs for energy, wood and other raw materials had a $585 million negative impact on earnings versus 2004, that’s about $0.87 per share,” Faraci explained. “We took a significant amount of lack-of-order downtime this year” he added.

However, the company remains positive. “The good news is that we were able to partially offset some of the negative impacts through operational improvements and year-over-year pricing improvements. So while our results aren’t yet where they need to be, we are taking the right steps to generate improved results long term.”


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