International Paper Co, the world's largest forest products company, on Tuesday said second-quarter profit fell 60 percent on weaker sales of industrial packaging and printing paper. Shares of the Stamford, Connecticut, company - which had warned it would miss earnings last month - fell less than 1 percent in early trading.
The company, also said demand in the current quarter looked mixed and pricing appeared to be flat, as high raw materials costs continued to affect profit margins.
Demand typically slows in the third quarter and so far this year, it has lagged 2004 levels.
"What we've seen ... is that industry volumes across a number of product lines are down a little bit from last year and our results have mirrored what's been happening in the industry in most products," IP Chief Financial Officer Marianne Parrs told Reuters.
Still, she expects third-quarter demand "to be reasonably similar" to last year's third quarter.
Net income slid to $77 million, or 16 cents a share, from $193 million, or 40 cents, a year earlier. Net sales rose to $6.5 billion from $6.2 billion.
Earnings from continuing operations, excluding special items, totalled 31 cents per share, topping analysts' expectations of 27 cents on revenue of $6.58 billion, according to Reuters Estimates.
One week ago, IP said it would review businesses that together accounted for 30 percent of sales and 40 percent of operating profit for potential spin-off or sale, seeking to exit sluggish markets and focus on the most potentially profitable businesses. Its shares are up slightly since.
Operating profit in the printing papers unit fell to $149 million from $183 million in the prior quarter, while operating profits in industrial packaging fell to $85 million from $105 million in the first quarter.
The company logged 135,000 tons of lack-of-order downtime in its printing papers unit in the second quarter, while its industrial packaging unit saw 140,000 tons of downtime.
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