International Paper Co. Earnings: Margins Shrink on Rising Costs, Net Income Falls
S&P 500 (NYSE:SPY) component International Paper Co. (NYSE:IP) reported its results for the first quarter. International Paper is a global paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia and North Africa.
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International Paper Earnings Cheat Sheet for the First Quarter
Results: Net income for International Paper Co. fell to $188 million (43 cents per share) vs. $281 million (65 cents per share) a year earlier. This is a decline of 33% from the year-earlier quarter.
Revenue: Rose 4.6% to $6.67 billion from the year-earlier quarter.
Actual vs. Wall St. Expectations: International Paper Co. reported adjusted net income of 57 cents per share. By that measure, the company beat the mean estimate of 51 cents per share. It fell short of the average revenue estimate of $6.79 billion.
Quoting Management: “First-quarter results reflect solid performance in an uneven global recovery,” said John Faraci, chairman and chief executive officer. “I’m encouraged with the early progress we are making integrating Temple-Inland and we are off to a very strong start in identifying and capturing the merger benefits. As we move into our seasonally heavy maintenance outages in the second quarter, we remain confident in the full year earnings and cash flow outlook of our global portfolio.”
The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 5 cents in the fourth quarter of the last fiscal year, by 12 cents in the third quarter of the last fiscal year, and by 14 cents in the second quarter of the last fiscal year.
Gross margin shrank 2.5 percentage points to 25.1%. The contraction appeared to be driven by increased costs, which rose 7.8% from the year earlier quarter while revenue rose 4.2%.
Last quarter’s year-over-year revenue increase breaks a two-quarter streak of revenue declines. Revenue fell 2.5% in the fourth quarter of the last fiscal year and fell 1.3% in the third quarter of the last fiscal year.
Looking Forward: Over the past ninety days, the average estimate for the second quarter has fallen from 68 cents per share to 57 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $2.70 per share, down from $3 ninety days ago.
(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)
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