International Paper Co. (IP) reported first quarter EPS of 78 cents, compared with a loss of 38 cents in the prior-year quarter.
The result outperformed the Zacks Consensus Estimate of 59 cents.
The EPS included a loss from discontinued operations of 11 cents and a gain of 7 cents from special items expense.
Excluding these items adjusted EPS amounted to 74 cents, versus a loss of 4 cents in the year-earlier quarter.
Net sales were $6,387 million, versus $5,807 million during the year-ago quarter. However, sales failed to surpass the Zacks Consensus Estimate of $6,409 million.
Cost and Margins
Cost of goods sold amounted to $4,625 million, an increase from $4,464 million during the year-earlier quarter. Selling and administrative expenses also shot up to $485 million from $421 million.
Operating income totaled $585 million; having increased drastically from $20 million in the prior-year quarter. As a result, operating margins improved by a whopping 870 basis points year-over-year to 9.15% in the quarter.
Segmental Performance
Industrial Packaging: Sales for this segment improved to $2,555 million from $2,220 million in the year-ago quarter. Operating income also improved substantially to $279 million from a meager $40 million in the prior-year quarter.
Printing Papers: Sales increased to $1530 million from $1405 million in the year-earlier quarter. The segment’s reported operating income was $201 million versus a loss of $78 million.
Consumer Packaging: Sales increased to $905 million from $805 million in the year-earlier quarter. Operating income was $100 million, which improved substantially from $28 million.
Distribution: Sales for the segment amounted to $1640 million, versus $1580 million in the year-ago quarter. However, operating income of this segment decreased to $5 million from $21 million in the year-earlier quarter.
Financial Position
Cash and cash equivalents of the company were $2049 million as of March 31, 2011, which declined from $2073 million as of December 31, 2010.
As of March 31, 2011, the debt-to-capitalization ratio improved to 51.8% compared with 55.9% as of December 31, 2010 and 57.9% as of September 30, 2010.
During the quarter, the company also generated cash flow of $514 million; an increase from $159 million during the prior-year quarter.
Peer Comparison
International Paper competes with MeadWestvaco Corporation (MWV) and Weyerhaeuser Co. (WY). MeadWestvaco recently reported an adjusted EPS of 43 cents in its fiscal first quarter, beating the Zacks Consensus Estimate of 23 cents.
MeadWestvaco also delivered net sales of $1.4 billion, surpassing $1.3 billion in the year-ago quarter. However, sales were at par with the Zacks Consensus Estimate.
Memphis, Tennessee-based International Paper Company is a global paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia and North Africa. International Paper conducts its businesses through five segments: Printing Papers, Industrial Packaging, Consumer Packaging, Distribution (Xpedx) and Forest Products.
The stock is currently a Zacks #3 Rank (short-term ‘Hold’ recommendation).
INTL PAPER (IP): Free Stock Analysis Report
MEADWESTVACO CP (MWV): Free Stock Analysis Report
WEYERHAEUSER CO (WY): Free Stock Analysis Report
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