IP: profit up but caution remains

4 February 2005 – Stamford (CT): Q4 profit at International Paper (IP) more than tripled thanks to higher paper prices, but the company expects raw material and other costs to hurt earnings in 2005, it said.

Net income at the world’s largest forest products company was $169 million for the quarter, up from $48 million a year ago. Net sales were $6.6 billion, up from $6.1 billion in the 2003’s Q4.

Full year figures, however, showed a net loss of $35 million, compared to a profit of $302 million in 2003. Sales were $25.5 billion for 2004, against $24 billion a year earlier.

CEO John Faraci said: "Throughout 2004, we experienced healthy business conditions with solid volume and improving average price realisations. However, margins and earnings were impacted by dramatically rising raw material costs and lower wood products pricing, particularly in the last quarter."

Commenting on the Q1 of 2005, he added: "Going into February, we are seeing demand starting to improve. After a slow in January, our order activity is picking up, and our average price realisations are moving up on coated paper, some grades of printing papers, bleached board and pulp. However, our profit margins and earnings will be under pressure as the raw material cost environment continues to be severe."