International paper explains Q1 earnings slump

International Paper has reported first quarter 2001 earnings of $24 million before special and extraordinary items, down sharply from comparable earnings for the same period a year earlier of $249 million. First quarter 2001 net sales were $6.9 billion, compared to $6.4 billion in the first-quarter 2000. First quarter 2000 figures do not include Champion International Corporation, which International Paper acquired in June of last year.

International Paper stated that the continuation of a dramatic slow down of orders due to a very weak U.S. economy and strong U.S. dollar hammered domestic profitability and export competitiveness.

Also influencing earnings this quarter were higher energy costs, lower volumes, and downward pressure on pricing. In addition, several of the company's larger facilities did not operate well early in the quarter.

In the Coated and Supercalendered Papers business, sales were weakened by a significant reduction in corporate and general business advertising. Printing and Communications Papers earnings reflect weak overall demand out somewhat better conditions in the converting markets. Pulp prices remained under increasing pressure.

The company's distribution business, xpedx, experienced lower sales volumes in commercial printing. To offset slow business conditions, xpedx is consolidating facilities and reducing some jobs while pursuing sales growth initiatives, the company added.