International Paper 3Q Profit Falls

MEMPHIS — International Paper Co. reported a drop in third-quarter profit Friday, but the paper and packaging company's adjusted results met Wall Street expectations. Improved pricing helped offset raw material costs.

Profit declined to $217 million, or 51 cents per share, from $224 million, or 46 cents per share, a year ago.

Earnings per share rose because the company had 425.6 million shares outstanding in the most recent quarter, versus 484.9 million in the same period last year.

Earnings per share from continuing operations and before one-time items rose to 57 cents per share from 45 cents per share last year, the company said.

Quarterly sales rose to $5.54 billion from $5.43 billion a year ago.

Analysts surveyed by Thomson Financial forecast earnings per share of 57 cents and sales of $5.38 billion. The earnings estimates typically exclude one-time items.

Its shares fell 60 cents, or 1.7 percent, to $35.47 in morning trading.

"We had a solid third quarter," CEO John Faraci said in a statement. "We continued to improve paper and packaging business earnings and expand markets, and we continue to improve earnings capacity from non-U.S. operations."

Faraci said volumes were flat quarter-to-quarter but overall prices improved, helping offset distribution costs and increases in costs of raw materials.

Special items lowering net income included restructuring costs and other charges totaling $42 million. Those charges included $37 million related to closing a company mill in Terre Haute, Ind.

The company, which has been in a major reorganization for the past year and a half, reported earlier this month that weak land sales were expected to contribute in lowering earnings below Wall Street expectations.

Faraci said International Paper expects "slightly higher" earnings from continuing operations in the upcoming quarter.

"Volumes will slow seasonally in most segments," he said. "We expect modest overall improvement in pricing with the realization of previously announced price increases. Costs for wood, energy and transportation will continue to increase and other costs will remain high."

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