IP continues cost cutbacks, layoffs

Pulp & Paper, Sep 2003

SALES AND EARNINGS

International Paper Co. (IP), said secondquarter net income fell 59% to $88 million from $215 million in 2002 ($169 million before special items). Secondquarter sales edged down to $6.26 billion from $6.31 billion, as volumes and pricing were generally down from the previous quarter.

IP's chairman and CEO John Dillon said continued cost cuts, including job layoffs, production downtime to balance supply and demand, and improved efficiencies at its paper mills, helped the company improve earnings from $44 million in the first quarter of 2003 ($68 million before special items).The company took 90,000 tons of market-related downtime across all grades in the second quarter. The quarter also included $50 million of plant closing and restructuring charges, which were offset by a $50-million tax adjustment.

As part of these moves, IP recently laid off some workers at its Memphis office complex, and contacts believe the company could be on the verge of more layoffs to cut costs.The largest paper and board producer in North America, IP has not released details about where the lay offs will occur or how many workers might lose their jobs in Memphis or companywide. However, Memphis employees will most likely be affected because the city is the operational center for IP Approximately 3,000 of IP's 100,000 worldwide workers are based in Memphis.

Separately, IP said a California jury ordered 22 insurance companies to pay the company $383 million to cover customer claims. IP sued the insurers to cover payments resolving property owners' claims under a 1998 class action setdement related to certain exterior siding products.