International Paper reported fourth quarter 2018 net earnings attributable to International Paper of $316 million ($0.78 per diluted share) compared with $562 million ($1.37 per diluted share) in the third quarter of 2018 and net earnings of $1.5 billion ($3.50 per diluted share) in the fourth quarter of 2017.
Image: Packaging Corporation of America has reported fourth quarter and full year 2018 results. Photo: courtesy of Master isolated images / FreeDigitalPhotos.net.
Full-year 2018 net earnings were $2.0 billion ($4.85 per diluted share) compared with net earnings of $2.1 billion ($5.13 per diluted share) for full-year 2017. Fourth quarter and full-year 2017 net earnings included a provisional net tax benefit of $1.2 billion ($2.93 per diluted share) related to the U.S. enactment of the Tax Cuts and Jobs Act of 2017 reported as a special item. Net earnings in all periods include the impact of special items, if any, non-operating pension expense and discontinued operations.
“International Paper delivered very strong earnings and returns in the fourth quarter and full year 2018, driven by solid commercial and operational performance across our three businesses,” said Mark Sutton, Chairman and Chief Executive Officer. “We returned $1.5 billion to shareholders through dividends and share repurchases, and we further strengthened our balance sheet. As we enter 2019, we are confident in our ability to continue to generate strong returns and grow cash flow to create value for our shareholders.”
Adjusted operating earnings in the fourth quarter of 2018 were $670 million ($1.65 per diluted share) compared with $641 million ($1.56 per diluted share) in the third quarter of 2018 and $530 million ($1.27 per diluted share) in the fourth quarter of 2017. Full-year 2018 adjusted operating earnings totaled $2.2 billion ($5.32 per diluted share) compared with $1.5 billion ($3.49 per diluted share) in 2017.
Net sales were $6.0 billion in the fourth quarter of 2018 compared with $5.9 billion in the third quarter of 2018 and $5.7 billion in the fourth quarter of 2017. Annual net sales totaled $23.3 billion in 2018 compared with $21.7 billion in 2017.
Business segment operating profits were $930 million in the fourth quarter of 2018 compared with $738 million in the third quarter of 2018 and $824 million in the fourth quarter of 2017. Full-year business segment operating profits were $2.9 billion in 2018 compared with $2.1 billion in 2017.
Cash provided by (used for) operations was $3.2 billion for the full-year 2018 compared with $1.8 billion in 2017. Cash provided by (used for) operations was $821 million in the fourth quarter of 2018 compared with $1.2 billion in the fourth quarter of 2017. Free cash flow (non-GAAP) was $1.7 billion for the full-year 2018 and $2.0 billion in 2017. Free cash flow (non-GAAP) was $535 million in the fourth quarter of 2018 compared with $732 million in the fourth quarter of 2017.
SEGMENT INFORMATION
The performance of the Company’s business segments is measured quarter to quarter without variations caused by special items, as management focuses on business segment operating profits excluding those items (non-GAAP). Fourth quarter 2018 business segment operating profits and business trends compared with the prior quarter are as follows:
Industrial Packaging operating profits in the fourth quarter of 2018 were $647 million ($646 million excluding special items) compared with $472 million ($598 million excluding special items) in the third quarter of 2018. In North America, earnings improved due to lower planned maintenance outage expenses partially offset by two fewer shipping days for boxes, lower containerboard volume and higher raw material costs. Higher sales prices for boxes were partially offset by lower export containerboard prices and the impact of mix. In Europe, results were driven by seasonally higher volumes and higher sales margins for boxes and improved results related to the ramp-up at the Madrid mill.
Global Cellulose Fibers operating profits in the fourth quarter of 2018 were $91 million ($93 million excluding special items) compared with $83 million ($85 million excluding special items) in the third quarter of 2018. Earnings improved due to higher average sales prices and increased fluff pulp sales volumes partially offset by continued hurricane-related costs and higher raw material costs.
Printing Papers operating profits in the fourth quarter of 2018 were $192 million ($197 million excluding special items) versus $183 million ($188 million excluding special items) in the third quarter of 2018. In North America, higher operating profits were primarily due to continued price realization, partially offset by higher planned maintenance outage costs and higher raw material costs.
In Brazil, earnings decreased as slightly higher sales prices and seasonally higher volumes were more than offset by higher raw material costs and unfavorable foreign currency impacts. In Europe and Russia, improved earnings were driven by higher average sales prices and seasonally higher volumes which were partially offset by higher raw material costs.
Ilim joint venture equity earnings were $67 million in the fourth quarter of 2018 compared with $74 million in the third quarter of 2018. Operationally, sales volumes increased as production capacity returned following the third-quarter maintenance outages. Average sales prices declined for sales of export softwood and hardwood pulp. The Company recognized a non-cash after-tax foreign exchange loss of $19 million in the fourth quarter of 2018 ($0.05 per diluted share), compared with a loss of $23 million in the third quarter of 2018 ($0.06 per diluted share), primarily due to Ilim’s U.S. dollar denominated net debt.
Graphic Packaging equity earnings on our 20.5% ownership position were $10 million in the fourth quarter of 2018 compared with $19 million in the third quarter of 2018.
Net corporate expenses were $8 million for the fourth quarter of 2018, compared with $20 million in the third quarter of 2018.
Source: Company Press Release