International Paper Reports First Quarter 2021 Results
International Paper reported first quarter 2021 financial results.
First Quarter 2021 Highlights
–First quarter net earnings (loss) attributable to International Paper of $349 million ($0.88 per diluted share), compared with $153 million ($0.39 per diluted share) in the fourth quarter of 2020 and $(141) million ($(0.36) per diluted share) in the first quarter of 2020. First quarter 2020 net earnings included an after-tax charge of $337 million ($0.85 per diluted share) for the impairment of the net assets and write-off of foreign currency translation adjustment following the announcement of the sale of our Brazil Packaging business.
–First quarter adjusted operating earnings* (non-GAAP) of $299 million ($0.76 per diluted share) compared with $296 million ($0.75 per diluted share) in the fourth quarter of 2020 and $226 million ($0.57 per diluted share) in the first quarter of 2020. First quarter 2021 adjusted operating earnings* include a pre-tax earnings impact of $(80) million ($(0.15) per diluted share) related to the winter storm in the U.S.
–First quarter cash provided by operations of $512 million compared with $649 million in the same period of 2020
–Returned $331 million to shareholders through dividends of $202 million and share repurchases of $129 million
–Reduced debt by $108 million
–Monetized approximately $400 million of investment in Graphic Packaging bringing our ownership to 7.4%
“International Paper delivered solid earnings and strong cash generation in the first quarter,” said Mark Sutton, Chairman and Chief Executive Officer. “Operationally, we performed well to mitigate the significant impact of the winter storm and support strong customer demand in our packaging business. Looking ahead, we see momentum continuing to build in our three businesses. We expect continued strong demand for corrugated packaging and absorbent pulp, and we’re seeing a much better supply/demand backdrop for printing papers, all of which contributes to a more favorable outlook in 2021.”
Sutton added, “I am mindful that we are still in the midst of a global pandemic. The health and safety of our employees remains our most important responsibility and I appreciate their commitment to take care of each other and our customers.”
Industrial Packaging operating profits (losses) in the first quarter of 2021 were $447 million compared with $431 million in the fourth quarter of 2020. In North America, earnings were solid as higher sales prices for boxes and export containerboard were offset by a $(75) million impact from the winter storm. Planned maintenance outage expenses were also higher. In Europe, earnings improved reflecting seasonally higher volumes in Morocco and lower operating costs, partially offset by lower average sales margins driven by higher containerboard costs.
Global Cellulose Fibers operating profits (losses) in the first quarter of 2021 were $(82) million compared with $(114) million in the fourth quarter of 2020. Earnings improved reflecting higher average sales prices and lower operating costs partially offset by higher input costs for wood and energy. Earnings benefited from the non-repeat of an asset write-off in the fourth quarter of 2020.
Printing Papers operating profits (losses) were $80 million in both the first quarter of 2021 and the fourth quarter of 2020. In North America, earnings were lower driven by higher input costs for wood and energy and higher planned maintenance outage expenses partially offset by lower economic downtime costs. In Brazil, earnings improved as seasonally lower sales volumes and higher input costs were more than offset by higher average sales prices, lower operating costs and favorable foreign currency impacts. In Europe and Russia, earnings were flat reflecting lower economic downtime costs and favorable foreign currency impacts mostly offset by lower average sales prices, an unfavorable geographic mix and higher input costs.
Equity Method Investments
Ilim joint venture equity earnings (loss) were $49 million in the first quarter of 2021 compared with $53 million in the fourth quarter of 2020. Operationally, earnings improved driven by higher export and domestic sales prices for softwood pulp, hardwood pulp and containerboard and lower operating costs. These benefits were partially offset by lower sales volumes. The Company recognized a non-cash after-tax foreign exchange loss of $2 million in the first quarter of 2021 ($0.01 per diluted share), compared with a gain of $22 million in the fourth quarter of 2020 ($0.05 per diluted share), primarily due to Ilim’s U.S. dollar denominated net debt.
Graphic Packaging equity earnings on our 7.4% ownership position were $1 million in the first quarter of 2021, compared with $11 million in the fourth quarter of 2020.
Corporate expenses (income) were $25 million for the first quarter of 2021, compared with $(16) million in the fourth quarter of 2020.
Effective Tax Rate
The reported effective tax rate for the first quarter of 2021 was 25%, compared to a 2020 fourth quarter reported effective tax rate of 28%. The tax rate in the fourth quarter was higher due to tax expense related to a non-deductible impairment of our EMEA Packaging business in Turkey, which was partially offset by a tax benefit related to the closure of the 2013-2014 IRS audit.
Excluding special items and non-operating pension expense, the operational effective tax rate for the first quarter of 2021 was 24%, compared with 26% for the fourth quarter of 2020. The lower operational effective tax rate in the first quarter is primarily related to the release of an uncertain tax position, treated as a discrete period item.
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About International Paper
International Paper (NYSE: IP) is a leading global producer of renewable fiber-based packaging, pulp and paper products with manufacturing operations in North America, Latin America, Europe, North Africa and Russia. We produce corrugated packaging products that protect and promote goods, and enable world-wide commerce; pulp for diapers, tissue and other personal hygiene products that promote health and wellness; and papers that facilitate education and communication. We are headquartered in Memphis, Tenn., employ approximately 48,000 colleagues and serve more than 25,000 customers in 150 countries. Net sales for 2020 were $21 billion. For more information about International Paper, our products and global citizenship efforts, please visit internationalpaper.com.
Source: International Paper Company