International Paper Reports Full-Year and Fourth Quarter 2023 Results

 International Paper (“IP”) reported full-year and fourth quarter 2023 financial results.

Full-Year and Fourth Quarter 2023 Results

• Full-year net earnings (loss) of $288 million ($0.82 per diluted share); Fourth quarter net earnings (loss) of $(284) million ($(0.82) per diluted share); Full-year and fourth quarter net earnings include a pre-tax charge of $540 million related to mill strategic actions
• Full-year adjusted operating earnings (non-GAAP) of $755 million ($2.16 per diluted share); Fourth quarter adjusted operating earnings (non-GAAP) of $142 million ($0.41 per diluted share)
• Full-year earnings benefit from Building a Better IP initiatives of $260 million, exceeding annual target
• Full-year cash provided by operations of $1.8 billion and returned $839 million to shareholders in share repurchases and dividends
• Full-year capital investments of $1.1 billion, including investments in packaging for future growth

“In 2023, the International Paper team demonstrated our agility by navigating through challenging market conditions,” said Mark Sutton, Chairman and Chief Executive Officer. “We executed well and delivered $260 million of Building a Better IP benefits, while accelerating cost reduction efforts across our operations and supply chain. Although earnings were impacted by lower demand and cost inflation, we executed strategic actions to further optimize our mill system and invest in the future growth of our packaging business. We also returned $839 million to our shareowners.”

“As we enter 2024,” Sutton added, “we remain committed to creating value for our customers and shareowners. We see demand growth across the markets we serve. Because our Building a Better IP mindset is embedded into our culture, we will continue to accelerate our commercial strategies and drive operational excellence to improve profitability.”

Segment Information

Industrial Packaging operating profits (losses) in the fourth quarter of 2023 were $315 million compared with $325 million in the third quarter of 2023. In North America, earnings were lower as higher sales volumes for containerboard, lower planned outage costs and lower economic downtime were more than offset by lower sales prices for containerboard and corrugated boxes, an unfavorable geographic mix and the non-repeat of favorable adjustments related to employee benefit costs in the third quarter of 2023. Input costs were slightly higher, as higher recovered fiber costs were mostly offset by lower energy and other raw material costs. In EMEA, earnings were higher, driven by seasonally higher volumes and a favorable product mix. EMEA earnings also benefited from an energy subsidy and other favorable one-time items in the fourth quarter of 2023.   

Global Cellulose Fibers operating profits (losses) in the fourth quarter of 2023 were $(58) million compared with $27 million in the third quarter of 2023. Earnings were impacted by lower pulp pricing, partially offset by an improved product mix. Earnings were also impacted by higher planned outage costs and the non-repeat of favorable adjustments related to employee benefit costs in the third quarter of 2023. Sales volumes improved and economic downtime was lower, reflecting continued market improvement. Input costs were lower, primarily for wood and chemicals.

Equity Method Investment – Ilim Joint Venture

The Company completed the sale of its investment in the prior Ilim joint venture in the third quarter of 2023 for proceeds of $508 million ($472 million net of transaction costs). All current period and historical results have been adjusted to reflect Ilim as a discontinued operation.

Corporate Expenses

Corporate expenses, net was a benefit of $9 million for the fourth quarter of 2023 compared with expense of $20 million in the third quarter of 2023.

Effective Tax Rate

The reported effective tax rate for the fourth quarter of 2023 was 19%, compared to 17% in the third quarter of 2023. The fourth quarter tax benefit is primarily driven by the impact of the mill strategic actions.

The operational effective tax rate was 34% for the fourth quarter of 2023 compared to 18% in the third quarter of 2023. The higher operational effective tax rate is a result of U.S. federal income tax benefits recorded in the third quarter as well as an increased deferred tax valuation allowance in the fourth quarter.

The operational effective tax rate is a non-GAAP financial measure and is calculated by adjusting the income tax provision from continuing operations and rate to exclude the tax effect of net special items and non-operating pension expense (income). Management believes that this presentation provides useful information to investors by providing a meaningful comparison of the income tax rate between past and present periods.

Effects of Special Items

Net special items in the fourth quarter of 2023 amount to a net after-tax charge of $415 million ($1.20 per diluted share) compared with a charge of $22 million ($0.06 per diluted share) in the third quarter of 2023 and a charge of $174 million ($0.49 per diluted share) in the fourth quarter of 2022.

For the full fourth quarter results, click here.

About International Paper

International Paper (NYSE: IP) is a global producer of sustainable packaging, pulp and other fiber-based products, and one of the world’s largest recyclers. Headquartered in Memphis, Tenn., we employ approximately 39,000 colleagues globally who are committed to creating what’s next. We serve customers worldwide, with manufacturing operations in North America, Latin America, North Africa and Europe. Net sales for 2023 were $18.9 billion. Additional information can be found by visiting internationalpaper.com.

Source: International Paper Company