International Paper (NYSE: IP) reported a preliminary first-quarter 2006 net loss of $1.2 billion ($2.52 per share) compared with a net loss of $77 million ($0.16 per share) in the fourth quarter of 2005 and net earnings of $77 million ($0.16 per share) in the 2005 first quarter. Amounts in all periods include special items as well as charges relating to the classification of the company's Coated and Supercalendered Papers and Kraft Papers businesses as discontinued operations.
Earnings from continuing operations and before special items in the first quarter of 2006 were $91 million ($0.19 per share), compared with $43 million ($0.09 per share) in the fourth quarter of 2005 and $165 million ($0.34 per share) in the first quarter of 2005.
First-quarter 2006 net sales of $5.7 billion were level with fourth quarter 2005. Sales in the first quarter of 2005 were $5.6 billion.
Operating profits of $456 million for the 2006 first quarter were higher than fourth-quarter 2005 operating profits of $371 million, because of higher price realizations, stronger volumes, lower manufacturing costs, sales mix improvements, and a drop in some raw material costs, primarily energy and wood.
"Higher price realizations, particularly in containerboard, boxes and uncoated papers, and strong mill performance and cost control are the biggest drivers of our earnings improvement from last quarter," said IP Chairman and Chief Executive Officer John Faraci. "We also experienced far less market downtime in the quarter than in last quarter. Energy and raw material costs declined some, but are still about $0.13 per share higher than at this time last year."
"I'm also pleased with the progress of IP's transformation strategy. We recently announced sale agreements for 5.7 million acres of U.S. forestland for approximately $6.6 billion, the second significant step in the plan. We now estimate that total after-tax proceeds from the transformation could exceed $11 billion. We are maintaining our focus on improving our key platform operations, and our strategic alternatives reviews are also on track," he said.
Commenting on the second quarter of 2006, Faraci said, "We expect the second quarter to be somewhat seasonally stronger than the first quarter, with average prices improving. We also anticipate continued progress in operations, as we move forward with our transformation strategy. Input costs remain high, especially for oil and transportation."
