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International Paper (IP) Q4 Earnings Beat Estimates, Sales Lag
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International Paper Company (IP - Free Report) reported fourth-quarter 2023 adjusted earnings of 41 cents per share, surpassing the Zacks Consensus Estimate of 34 cents by a margin of 21%. The bottom line slumped 53% year over year due to a decline in volumes in each of the categories, barring containerboard as well as lower prices in both Industrial Packaging and Global Cellulose Fibers.
Including one-time items, the company posted a loss per share of 82 cents from continuing operations in fourth-quarter 2023 against earnings per share of 48 cents in the year-ago quarter.
Net sales were $4.6 billion in the quarter under review, down 10% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $4.7 billion.
The cost of sales was around $3.3 billion in the quarter under review, down 10.5% from the prior-year quarter’s $3.67 billion. Gross profit declined 10% year over year to $1.3 billion.
International Paper Company Price, Consensus and EPS Surprise
Selling and administrative expenses were $357 million, which increased 13% from $315 million in last year’s quarter. Total segment operating profit plunged 43% year over year to $257 million in the quarter. Adjusted operating profit in the quarter was $142 million compared with $309 million in the fourth quarter of 2022.
The company realized earnings of $260 million from its Building a Better IP set of initiatives in 2023, exceeding expectations.
Segment Performances
Industrial Packaging: The segment’s sales were $3.8 billion, down 8% from last year’s reported figure. Operating profit plunged 24% year over year to $315 million.
The segment reported corrugating packaging volumes of 2,325 thousand short tons, down 5% from last year’s comparable quarter. We had projected corrugating packaging volumes to be around 2,454 thousand short tons for the quarter.
Containerboard volumes in the fourth quarter were 783 thousand short tons, up 43% compared with the year-ago quarter. The figure came in higher than our estimate of 600 thousand short tons.
Recycling volumes dipped 2% year over year to 535 thousand short tons, lower than our projection of 545 thousand short tons.
Volumes in Saturated Kraft were flat year over year while Gypsum /Release Kraft volumes dipped 13%. EMEA Packaging reported a 3% drop in volumes.
Overall, the volumes for the Industrial Packaging segment were 4,074 thousand short tons, which rose 2% from the fourth quarter of 2022. The figure came in higher than our projection of 4,051 thousand short tons, which was based on 1.7% growth from last year quarter.
Global Cellulose Fibers: The segment’s sales declined 22% year over year to $656 million in the fourth quarter. The segment reported an operating loss of $58 million in the quarter against an operating profit of $35 million in the year-ago quarter.
The segment’s volumes were reported to be 676 thousand metric tons, which was down 5% year over year. The figure came in lower than our expectation of 714 thousand metric tons, which had factored in a 0.5% year-over-year improvement.
Financial Position
Cash and temporary investments aggregated $1.11 billion at the end of 2023 compared with $0.8 billion at the end of 2022. Throughout 2023, the company has returned $839 million as share repurchases and dividends.
At the end of 2023, IP’s long-term debt was around $5.46 billion compared with $4.82 billion as of 2022 end. Cash flow from operating activities was $1.8 billion in 2023 compared with $2.2 million in 2022.
Fiscal 2023 Performance
International Paper reported adjusted earnings of $2.16 per share in 2023, surpassing the Zacks Consensus Estimate of $2.10. The figure, however, marked a 32% decline from earnings per share of $3.18 in 2022.
Including one-time items, the company reported earnings per share of 86 cents from continuing operations in 2023 compared with earnings per share of $4.74 in 2022.
Net sales were $18.9 billion in 2023, which missed the Zacks Consensus Estimate of $19.01 billion. Sales declined 10.6% year over year.
Price Performance
International Paper’s shares have fallen 12.3% in the past year against the industry’s 1.5% increase.
Some other top-ranked stocks from the basic materials space are Cameco Corporation (CCJ - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Alpha Metallurgical Resources Inc. (AMR - Free Report) .
Cameco, sporting a current Zacks Rank of 1, has a projected earnings growth rate of 188% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised 12.5% upward in the past 60 days. The stock is up around 66.6% in a year.
Carpenter Technology currently sports a Zacks Rank of 1. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 12.2%. The company’s shares have soared 23.7% in the past year.
The Zacks Consensus Estimate for AMR’s current-year earnings has been revised 69% upward in the past 60 days. It currently sports a Zacks Rank of 1. AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 144.6% in a year.
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International Paper (IP) Q4 Earnings Beat Estimates, Sales Lag
International Paper Company (IP - Free Report) reported fourth-quarter 2023 adjusted earnings of 41 cents per share, surpassing the Zacks Consensus Estimate of 34 cents by a margin of 21%. The bottom line slumped 53% year over year due to a decline in volumes in each of the categories, barring containerboard as well as lower prices in both Industrial Packaging and Global Cellulose Fibers.
Including one-time items, the company posted a loss per share of 82 cents from continuing operations in fourth-quarter 2023 against earnings per share of 48 cents in the year-ago quarter.
Net sales were $4.6 billion in the quarter under review, down 10% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $4.7 billion.
The cost of sales was around $3.3 billion in the quarter under review, down 10.5% from the prior-year quarter’s $3.67 billion. Gross profit declined 10% year over year to $1.3 billion.
International Paper Company Price, Consensus and EPS Surprise
International Paper Company price-consensus-eps-surprise-chart | International Paper Company Quote
Selling and administrative expenses were $357 million, which increased 13% from $315 million in last year’s quarter. Total segment operating profit plunged 43% year over year to $257 million in the quarter. Adjusted operating profit in the quarter was $142 million compared with $309 million in the fourth quarter of 2022.
The company realized earnings of $260 million from its Building a Better IP set of initiatives in 2023, exceeding expectations.
Segment Performances
Industrial Packaging: The segment’s sales were $3.8 billion, down 8% from last year’s reported figure. Operating profit plunged 24% year over year to $315 million.
The segment reported corrugating packaging volumes of 2,325 thousand short tons, down 5% from last year’s comparable quarter. We had projected corrugating packaging volumes to be around 2,454 thousand short tons for the quarter.
Containerboard volumes in the fourth quarter were 783 thousand short tons, up 43% compared with the year-ago quarter. The figure came in higher than our estimate of 600 thousand short tons.
Recycling volumes dipped 2% year over year to 535 thousand short tons, lower than our projection of 545 thousand short tons.
Volumes in Saturated Kraft were flat year over year while Gypsum /Release Kraft volumes dipped 13%. EMEA Packaging reported a 3% drop in volumes.
Overall, the volumes for the Industrial Packaging segment were 4,074 thousand short tons, which rose 2% from the fourth quarter of 2022. The figure came in higher than our projection of 4,051 thousand short tons, which was based on 1.7% growth from last year quarter.
Global Cellulose Fibers: The segment’s sales declined 22% year over year to $656 million in the fourth quarter. The segment reported an operating loss of $58 million in the quarter against an operating profit of $35 million in the year-ago quarter.
The segment’s volumes were reported to be 676 thousand metric tons, which was down 5% year over year. The figure came in lower than our expectation of 714 thousand metric tons, which had factored in a 0.5% year-over-year improvement.
Financial Position
Cash and temporary investments aggregated $1.11 billion at the end of 2023 compared with $0.8 billion at the end of 2022. Throughout 2023, the company has returned $839 million as share repurchases and dividends.
At the end of 2023, IP’s long-term debt was around $5.46 billion compared with $4.82 billion as of 2022 end. Cash flow from operating activities was $1.8 billion in 2023 compared with $2.2 million in 2022.
Fiscal 2023 Performance
International Paper reported adjusted earnings of $2.16 per share in 2023, surpassing the Zacks Consensus Estimate of $2.10. The figure, however, marked a 32% decline from earnings per share of $3.18 in 2022.
Including one-time items, the company reported earnings per share of 86 cents from continuing operations in 2023 compared with earnings per share of $4.74 in 2022.
Net sales were $18.9 billion in 2023, which missed the Zacks Consensus Estimate of $19.01 billion. Sales declined 10.6% year over year.
Price Performance
International Paper’s shares have fallen 12.3% in the past year against the industry’s 1.5% increase.
Image Source: Zacks Investment Research
Zacks Rank & Other Stocks to Consider
International Paper currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked stocks from the basic materials space are Cameco Corporation (CCJ - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Alpha Metallurgical Resources Inc. (AMR - Free Report) .
Cameco, sporting a current Zacks Rank of 1, has a projected earnings growth rate of 188% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised 12.5% upward in the past 60 days. The stock is up around 66.6% in a year.
Carpenter Technology currently sports a Zacks Rank of 1. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 12.2%. The company’s shares have soared 23.7% in the past year.
The Zacks Consensus Estimate for AMR’s current-year earnings has been revised 69% upward in the past 60 days. It currently sports a Zacks Rank of 1. AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 144.6% in a year.