IP CFO Discusses Strategic Moves for 2016

 

According to a report this past week by the Memphis Business Journal, Memphis, Tenn., USA, what was originally expected to be a " seasonally weak" fourth quarter reportedly exceeded expectations for International Paper (Memphis, Tenn.) closing out what Carol Roberts, the company’s CFO, said was a strong year. After the company’s third quarter 2015 earnings, Roberts said they were preparing for a weak fourth quarter because International Paper (IP) usually schedules outages at its facilities. However, fourth quarter earnings exceeded expectations "by about a nickel," according to Roberts.

"We’re a main street business, and the products we make are driven by the consumer," Roberts said in the report. "What we saw for corrugated packaging was box demand matched demand of a year ago. Most people would say that’s flat, but the overall industry was up a bit and full-year demand was up a percent and a half. Consumers are out doing things that are good for our business."

Roberts said IP has also strengthened its position in the Russian and Brazilian markets. Despite the instability of Russian currency, the company is able to see positive outcomes, because most of its sales in that market are done in dollars.

 

"(In Brazil and Russia), we can sell everything we make," she said. "The market is choppy, so you have to be ready, agile and have a system that can respond. We have that in place."

 

Looking forward to 2016, IP is in the process of converting a mill in Riegelwood, N.C., from coated paper to fluff production, which is used to produce diapers and other hygiene products. The company is investing $135 million on the conversion, which Roberts said will take about six months.

"It’s a big strategic move," she said. "We’ve been working hard as we transform the company, and 2016 is a transition year we feel will pay dividends in our business."

 

While Brazilian and Russian markets are strong, IP is still in the process of selling its Chinese box business. The company has a letter of intent in place, but not a finalized deal. In late 2015, International Paper sold its 55% equity interest in IP-Sun JV, a joint venture with a Chinese coated-board partner, because of limited availability of materials in China.

 

"We’re committed to getting that sale done in 2016," she said. "In China, things are a little bit slower and complicated, but there’s no change in our path."

Roberts said the company is now working through a first quarter that is typically "our weakest overall quarter of the year" because of continued outages and lower product demands. We’ll navigate through it, but I don’t see a shift in business conditions or our outlook. We believe we have a strong portfolio of business and deserve to be successful."