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International Paper (IP) Q1 Earnings Beat Estimates, Down Y/Y
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International Paper Company (IP - Free Report) reported first-quarter 2023 adjusted earnings of 53 cents per share, surpassing the Zacks Consensus Estimate of 49 cents by a margin of 39%. The bottom line however declined 39% year over year. Sales volumes for corrugated boxes and containerboard continue to be impacted by customer inventory destocking.
Including one-time items, the company posted earnings per share of 49 cents from continuing operations in first-quarter 2023, compared with 95 cents in the year-ago quarter.
International Paper Company Price, Consensus and EPS Surprise
On Jan 24, 2023, IP announced its intention to sell its investment in the Ilim joint venture, subject to regulatory approvals. The company recognized a $533 million impairment charge in the fourth quarter of 2022. In the first quarter of 2023, the company recognized an additional $43 million impairment charge including approximately $43 million of foreign currency translation adjustment loss.
Net sales were $5.02 billion in the quarter under review, down 4% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $4.95 billion.
The cost of sales was $3,642 million in the quarter under review, down 5% from the prior-year quarter’s $3,839 million. Gross profit dipped 1% year over year to $1,378 million.
Selling and administrative expenses were $381 million, which increased 11% from $341 million in the last year’s quarter. Total segment operating profit was $306 million compared with $348 million in the year-ago quarter.
The company realized earnings of $65 million from its Building a Better IP set of initiatives in the first quarter of 2023.
Segment Performance
Industrial Packaging: The segment’s sales were $4.1 billion, down 7% year on year. Operating profit declined 19% year over year to $322 million.
Global Cellulose Fibers: The segment’s sales climbed 14% year over year to $811 million in the first quarter. The segment reported an operating loss of $16 million in the quarter compared with a loss of $49 million in the year-ago quarter.
Financial Position
Cash and temporary investments aggregated $636 million at the end of the first quarter of 2023 compared with $804 million as of the end of 2022. Throughout the first quarter of 2023, the company repurchased shares worth $157 million and paid dividends worth $162 million.
At the end of the first quarter of 2023, IP’s long-term debt was around $5.5 billion compared with $4.8 billion as of 2022-end. Cash flow from operating activities was $345 million in the first quarter of 2023 compared with $588 million in the prior year quarter.
Price Performance
International Paper’s shares have fallen 27% in the past year compared with the industry’s 31.1% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
International Paper currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , Linde plc (LIN - Free Report) and PPG Industries, Inc. (PPG - Free Report) .
Shares of STLD have gained 16% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 10.7% on average.
Linde, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 9.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.97% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 5.9%, on average. The stock has gained 19% over the past year.
PPG Industries currently carries a Zacks Rank of 2 and has a projected earnings growth rate of 18.4% for the current year. Shares of PPG have gained 10.5% in the past year. It delivered a trailing four-quarter earnings surprise of 6 % on average.
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International Paper (IP) Q1 Earnings Beat Estimates, Down Y/Y
International Paper Company (IP - Free Report) reported first-quarter 2023 adjusted earnings of 53 cents per share, surpassing the Zacks Consensus Estimate of 49 cents by a margin of 39%. The bottom line however declined 39% year over year. Sales volumes for corrugated boxes and containerboard continue to be impacted by customer inventory destocking.
Including one-time items, the company posted earnings per share of 49 cents from continuing operations in first-quarter 2023, compared with 95 cents in the year-ago quarter.
International Paper Company Price, Consensus and EPS Surprise
International Paper Company price-consensus-eps-surprise-chart | International Paper Company Quote
On Jan 24, 2023, IP announced its intention to sell its investment in the Ilim joint venture, subject to regulatory approvals. The company recognized a $533 million impairment charge in the fourth quarter of 2022. In the first quarter of 2023, the company recognized an additional $43 million impairment charge including approximately $43 million of foreign currency translation adjustment loss.
Net sales were $5.02 billion in the quarter under review, down 4% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $4.95 billion.
The cost of sales was $3,642 million in the quarter under review, down 5% from the prior-year quarter’s $3,839 million. Gross profit dipped 1% year over year to $1,378 million.
Selling and administrative expenses were $381 million, which increased 11% from $341 million in the last year’s quarter. Total segment operating profit was $306 million compared with $348 million in the year-ago quarter.
The company realized earnings of $65 million from its Building a Better IP set of initiatives in the first quarter of 2023.
Segment Performance
Industrial Packaging: The segment’s sales were $4.1 billion, down 7% year on year. Operating profit declined 19% year over year to $322 million.
Global Cellulose Fibers: The segment’s sales climbed 14% year over year to $811 million in the first quarter. The segment reported an operating loss of $16 million in the quarter compared with a loss of $49 million in the year-ago quarter.
Financial Position
Cash and temporary investments aggregated $636 million at the end of the first quarter of 2023 compared with $804 million as of the end of 2022. Throughout the first quarter of 2023, the company repurchased shares worth $157 million and paid dividends worth $162 million.
At the end of the first quarter of 2023, IP’s long-term debt was around $5.5 billion compared with $4.8 billion as of 2022-end. Cash flow from operating activities was $345 million in the first quarter of 2023 compared with $588 million in the prior year quarter.
Price Performance
International Paper’s shares have fallen 27% in the past year compared with the industry’s 31.1% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
International Paper currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , Linde plc (LIN - Free Report) and PPG Industries, Inc. (PPG - Free Report) .
Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of STLD have gained 16% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 10.7% on average.
Linde, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 9.1% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.97% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 5.9%, on average. The stock has gained 19% over the past year.
PPG Industries currently carries a Zacks Rank of 2 and has a projected earnings growth rate of 18.4% for the current year. Shares of PPG have gained 10.5% in the past year. It delivered a trailing four-quarter earnings surprise of 6 % on average.