Don Merkley, union president at International Paper plant in Lake Wales, said Wednesday he knew the company would shut down the plant once the federal government approved its $4.3 billion merger with competitor Temple-Inland Inc. last year.
Merkley's crystal ball proved correct as International Paper announced Tuesday it would lay off 61 workers by June 19 at the corrugated box plant and put the huge manufacturing and shipping facility on about 50 acres up for sale.
"If the government had not allowed the purchase and allowed (International Paper) to get a monopoly of the business, we would still be running," said Merkley, president of United Steel Workers Local 622 and a worker at the plant for 12 years.
Company spokeswoman Cynthia Godby acknowledged in an email to The Ledger the Temple-Inland deal led to the Lake Wales' plant closing.
"The combination of the former Temple-Inland and International Paper corrugated packaging portfolios has created overlap in some areas, leading to overcapacity within our system as compared with our customer needs," Godby said. "We determined that other facilities in the area are better equipped to handle the production requirements that will be necessary due to the consolidation of our operations in the area."
The Lake Wales workers have been promised preferential hiring at International Paper's plants in Plant City, Tampa and Orlando, said Merkley and Joe Hemphill, a 17-year worker there. The Orlando plant came in the Temple-Inland deal.
In approving that deal in February 2012, the U.S. Justice Department required International Paper to sell three container board mills in California, Tennessee and Kentucky. The mills make corrugated board, which is shipped to other plants like Lake Wales for manufacture into boxes and other containers.
The Justice Department originally opposed the merger on anti-competition grounds because International Paper was the largest North American producer of container boards while the former Temple-Inland was the third largest manufacturer. More than 90 percent of all U.S. goods are shipped in corrugated containers, the department noted.
"We can't afford to lose any jobs," said Betty Wojick, executive director of the Lake Wales Area Chamber of Commerce, about the announcement. "The higher-paying the jobs are, the bigger the economic impact will be. When you lose manufacturing jobs, it's particularly tough."
The chamber and the newly created Lake Wales Economic Development Council will work to find a new tenant for the facility, Wojick said, but that task will be difficult for a plant of that size.
Harold Gallup, the economic development director for the city of Lake Wales, agreed.
"It (the size) narrows your field of prospects considerably," said Gallup, who estimated the plant size at 400,000 square feet.
On the positive side, the plant has railroad access, he added, and the opening of the CSX railroad terminal in Winter Haven by the second quarter 2014 could attract buyers.
Gallup also agreed with Wojick that the economic impact would be great because the plant employed a wide range of skilled employees from the manager to skilled workers.
"It's a great cross-section of employment that will be gone. It's going to be tough to find jobs of that nature in the area, not just Lake Wales," Gallup said.
The plant's biggest customers were fresh fruit and vegetable packinghouses, such as DiMare Fresh Inc. in Ruskin, one of the three largest U.S. tomato shippers, Merkley said.
International Paper had been downsizing the plant, which employed 80 people a year ago, even before the Temple-Inland purchase, he said. It employed about 125 people when Merkley began a dozen years ago.
The plant had experienced frequent production shutdowns in recent years because of equipment failures, which may have contributed to the company's decision to shut down in Lake Wales instead of other Central Florida plants, Hemphill and Merkley said.
"I could point at management and see where it failed," Hemphill said.
In particular, the plant had problems integrating equipment it moved from International Paper's former Auburndale corrugated container plant, which was closed in June 2009 at a loss of 96 jobs, he said.
When he started at the plant 17 years ago, it was owned by the St. Joe Co., Hemphill said. St. Joe, headquartered in the Panhandle community of Watersound, decided to get out of paper manufacturing in the 1990s and now operates as a land development company with about 567,000 acres, the second largest private property owner in Florida behind Plum Creek Timber.
St. Joe sold the Lake Wales plant to Chicago-based Box USA a couple years later, Hemphill said. International Paper purchased Box USA in July 2004.
International Paper (NYSE: IP) has announced it is in talks with Unisource regarding a proposed business combination of xpedx, International Paper's distribution business, and Unisource. Both xpedx and Unisource are business-to-business distributors of printing, packaging and facility supplies. The discussions were initiated when Unisource approached International Paper about a possible merger, and on April 19, 2013, the parties entered into a non-binding letter of intent to explore a possible transaction.
The letter of intent outlines a "Reverse Morris Trust" transaction in which International Paper would contribute the assets of xpedx to a newly-formed corporation, and receive a cash dividend financed with debt in the new corporation's capital structure. This new corporation would be spun off to International Paper shareholders and immediately thereafter merged with Unisource in a transaction intended to be tax-free to International Paper and its shareholders.
The amounts of the relative ownership in the merged company by International Paper and Unisource shareholders, and the amount of the dividend payment to International Paper, are the subject of further negotiations between the parties. Following the spin-off and merger, the new company would be an independent publicly traded corporation with a majority of independent directors. Some combination of current xpedx and Unisource management is expected to lead the new company.
John Faraci, Chairman and CEO of International Paper said he sees considerable potential in the merger. "This is a unique opportunity for xpedx and Unisource to create a new company that is stronger, more competitive and provide even greater value to customers. Both companies are well-run, with a lot of talented employees and a good customer base."
The parties have agreed to negotiate exclusively with each other for a period of time until a definitive agreement can be reached or the parties terminate the letter of intent. No assurances can be made that the parties will reach agreement on a mutually acceptable transaction or that the transaction, if completed, will be on the terms outlined in the letter of intent. If no agreement on the transaction can be reached, xpedx will continue to operate as a division of International Paper. International Paper does not intend to seek alternative transactions for xpedx.
Subject to applicable laws and regulations, the parties do not intend, and undertake no obligation, to provide updates or make further statements regarding these discussions or the potential transaction until the letter of intent is terminated, or until a definitive agreement is reached. The process to complete a transaction could take up to 12 months.
SOURCE International Paper
International Paper Company (NYSE: IP)‘s stock had its “neutral” rating reiterated by investment analysts at Goldman Sachs in a note issued to investors on Friday, AnalystRatingsNetwork reports. They currently have a $51.00 target price on the stock.
Shares of International Paper Company (NYSE: IP) traded up 0.39% during mid-day trading on Friday, hitting $48.42. International Paper Company has a 52 week low of $27.29 and a 52 week high of $49.10. The stock’s 50-day moving average is currently $45.37. The company has a market cap of $21.363 billion and a P/E ratio of 26.76.
International Paper Company (NYSE: IP) last posted its quarterly earnings results on Tuesday, January 29th. The company reported $0.69 earnings per share for the quarter, beating the analysts’ consensus estimate of $0.63 by $0.06. The company had revenue of $7.08 billion for the quarter, compared to the consensus estimate of $7.02 billion. During the same quarter last year, the company posted $0.66 earnings per share. International Paper Company’s revenue was up 11.1% compared to the same quarter last year. Analysts expect that International Paper Company will post $3.90 EPS for the current fiscal year.
Several other analysts have also recently commented on the stock. Analysts at Jefferies Group reiterated a “buy” rating on shares of International Paper Company in a research note to investors on Friday. They now have a $60.00 price target on the stock, up previously from $52.00. Separately, analysts at UBS AG raised their price target on shares of International Paper Company from $46.00 to $52.00 in a research note to investors on Wednesday. They now have a “buy” rating on the stock. Finally, analysts at Longbow Research reiterated a “buy” rating on shares of International Paper Company in a research note to investors on Tuesday, April 2nd. They now have a $56.00 price target on the stock.
Four research analysts have rated the stock with a hold rating and fourteen have issued a buy rating to the company’s stock. International Paper Company presently has an average rating of “Buy” and a consensus price target of $45.44.
Work to Focus on Forest Conservation in Southeastern United States
International Paper, the world’s largest paper company and Dogwood Alliance, one of the Southern United States leading forest conservation organizations, announced an agreement today that will help advance science based forestry improvements in the world’s largest paper producing region. The former foes will map forests around International Paper’s southeastern operations to identify whether any endangered forests or high conservation value areas exist. This mapping will help ensure that IP is not sourcing from any endangered forests as per its long-standing company policy and will also identify mutually-agreed upon areas where conservation can be focused. In addition, IP and Dogwood Alliance will work together to discourage the conversion of natural hardwood forests to pine plantations.
This collaboration builds on initiatives recently announced by International Paper. The first is IP’s membership in the World Wildlife Fund’s Global Forest & Trade Network in North America. Additionally, IP announced a $7.5 million five-year project with the National Fish and Wildlife Foundation to restore and conserve forests in the Coastal Carolinas, Cumberland Plateau and Texas/Arkansas Piney Woods regions. Finally, IP announced an increase in its sourcing of Forest Stewardship Council certified fiber by more than 1.2 million tons during the past five years, and expects to triple that increase by the end of 2014. The company continues to support multiple certification standards as part of its public goal of increasing certified fiber.
“IP has a clear, built in need to maintain healthy forests; our business creates the economic basis for millions of acres of land to remain as forests over long periods of time,” said Teri Shanahan, International Paper’s vice president of Sustainability. “Engaging with our critics is an important part of our process of continuous improvement. We look forward to working with Dogwood, because it’s clear that, although we approach it from markedly different perspectives, they are as passionate about the forests as we are.”
“IP’s leadership on FSC certification and its recently-announced commitment to fund conservation in regions that have long been a priority for us opened the door for transitioning our formerly adversarial relationship to one of collaboration,” said Danna Smith, Executive Director of Dogwood Alliance. “We are pleased to work with IP on these initiatives, that, when combined with our collaborative effort, set a leadership standard within the Southern forest industry.”
The collaboration will kick off with a 2013 pilot project to map forests around IP’s mill in Riegelwood, N.C. (near Wilmington). After the pilot project, IP and Dogwood Alliance will evaluate the framework used and modify it as necessary with the intent of applying it across additional IP southeastern operations.
This affiliation represents an unprecedented relationship between Dogwood and IP. Dogwood Alliance has been critical of International Paper in the past, though it has increasingly worked with industry leaders to find innovative business solutions that protect Southern forests.
Until today, International Paper has not been able to reach agreement with Dogwood Alliance although the company’s focus on sustainable forestry practices has led to collaborations with a broad set of stakeholders in the conservation community.
Source: Dogwood Alliance and International Paper
International Paper has joined the Global Forest & Trade Network in North America (GFTN), one of World Wildlife Fund (WWF)'s initiatives focused on eliminating illegal logging and promoting environmentally and socially responsible forest management. International Paper joins a network of more than 200 companies and communities around the globe committed to the responsible forest management and sourcing of forest products.
"We have long been committed to responsible forestry everywhere we operate, and collaborating with WWF is an excellent way to demonstrate and grow that commitment," said Teri Shanahan, International Paper's vice president, Sustainability. The initial scope of International Paper's participation in GFTN will encompass fiber sourced for the company's North American and Brazilian mills, representing more than two thirds of its global fiber volume.
"By joining GFTN and increasing its sourcing of credibly certified fiber, International Paper – as the world's largest paper and packaging company – can use its purchasing power to drive improvements in responsible forestry around the globe," said Suzanne Apple, vice president of Business and Industry for WWF. "This kind of leadership is critical to conserving the places and species we are working so hard to protect."
In the U.S., International Paper has increased its sourcing of Forest Stewardship Council certified fiber by more than 1.2 million tons over the past five years, and expects to triple that increase by the end of 2014. While IP supports multiple certification standards, the company has developed a highly successful model for increasing its supply of FSC-certified fiber in the Southeastern United States. In Brazil, International Paper's operations source approximately 75 percent of its pulp wood from FSC-certified sources.
As a GFTN participant, International Paper will release an updated global fiber sourcing policy, which can be viewed at internationalpaper.com. International Paper announced a set of voluntary goals in 2012, including one focused on increasing 3rd-party certified wood fiber by 15% by 2020. Participation in GFTN aligns well with this goal, as the company implements an action plan toward achieving its 2020 target. In addition, International Paper will support WWF's efforts to protect forests holding particular value for their biodiversity, landscape and socio-economic benefits. International Paper is committed to chain-of-custody certification, providing additional assurance that wood products from certified and responsibly managed forests are tracked throughout the supply chain.
"Ensuring the continued health of the world's forests is among our top priorities at International Paper," said James McDonald, International Paper's manager, Sustainability. "We see our voluntary sustainability goals as well as collaboration with GFTN as important for continuing to protect this natural resource."
SOURCE International Paper
For the seventh straight year, International Paper (NYSE: IP) was named as one of the World's Most Ethical Companies by The Ethisphere Institute. Despite a record number of global nominees, International Paper secured a spot on the list by maintaining its focus on the ethical business practices and standards that have defined the Company since its inception more than 100 years ago.
"This is an important recognition that encompasses all that we do at International Paper. We are a company of substance in the more than 24 countries where we operate – and we are strengthened by the results of our employees who do the right things for the right reasons," said Chairman and CEO John Faraci.
A record number of nominations and applications this year is evidence of both the World's Most Ethical Companies' growing recognition by various stakeholder groups and companies' desire to be recognized for their integrity standards and ethical cultures. The 2013 list is the largest list since the award's inception in 2007.
"Not only did more companies apply for the World's Most Ethical Companies recognition this year than any year in the past, which demonstrates that ethical activity is an important part of many of these companies' business models, but we are also seeing more companies be proactive and create new initiatives that expand ethics programs and cultures across entire industries, such as industry-based ethics associations and other activities," said Alex Brigham, Executive Director of Ethisphere. "We are excited to see the 2013 World's Most Ethical Companies take these leadership positions, and embrace the correlation between ethical behavior and improved financial performance."
"At International Paper, we are accountable for all that we do and it's a culture embraced by our 70,000 employees worldwide," said Sharon Ryan, senior vice president, General Counsel & Corporate Secretary. "We are defined by a commitment to ethical behavior, personal integrity and these values support our compliance standards worldwide."
Through in-depth research and a multi-step analysis, Ethisphere reviewed nominations from companies in more than 100 countries and 36 industries. The methodology for the World's Most Ethical Companies includes reviewing codes of ethics, litigation and regulatory infraction histories; evaluating the investment in innovation and sustainable business practices; looking at activities designed to improve corporate citizenship; and studying nominations from senior executives, industry peers, suppliers and customers.
Read about the methodology and view the complete list of the 2013 World's Most Ethical Companies at http://ethisphere.com/wme. The World's Most Ethical Companies list will also be featured in the 2013 Quarter 1 issue of Ethisphere Magazine.
SOURCE International Paper
International Paper has announced that it has once again been named by FORTUNE magazine as the No. 1 company in the Forest and Paper Products sector according to FORTUNE's annual report of "America's Most Admired Companies." This is International Paper's tenth time in the last eleven years to top the Fortune list within this category. Out of the nine key attributes on which companies are judgedInternational Paper took the top spot in seven of those categories within its industry. Those categories included, people management, quality of management, financial soundness, quality of products and services, global competitiveness, use of corporate assets and innovation.
"This is well-deserved recognition and a reflection of International Paper's 68,000 talented employees around the globe," said John Faraci, chairman and chief executive officer. "Managing through an uneven global economy while continuing to generate solid results is what good execution is all about. Congratulations to all of our employees."
The FORTUNE/Hay Group study compiles its data from approximately 1,400 companies: the Fortune 1,000 (the 1,000 largest U.S. companies ranked by revenue) and non-U.S. companies in Fortune's Global 500 database with revenue of$10 billion or more. Hay then selected the 15 largest for each international industry and the 10 largest for each U.S. industry, surveying a total of 687 companies from 30 countries. To create the 57 industry lists, Hay asked executives, directors, and analysts to rate companies in their industry on nine criteria, from investment value to social responsibility. A company's score must rank in the top half of its industry survey to be listed.
To arrive at the top 50 Most Admired Companies overall, the Hay Group asked 3,800 respondents to select the 10 companies they admired most. They chose from a list made up of the companies that ranked in the top 25% in last year's survey, plus those that finished in the top 20% of their industry. Anyone could vote for any company in any industry.
Hay Group, which has conducted the research for the World's Most Admired Companies list since 1997 and for America's Most Admired Companies since 2001, is a global management consulting firm. For information about Hay Group's services, go to www.haygroup.com
SOURCE International Paper
International Paper (NYSE: IP) reported preliminary full-year 2012 net earnings attributable to common shareholders totaling $794 million ($1.80 per share) compared with $1.3 billion($3.03 per share) in full-year 2011. In the fourth quarter of 2012, the company reported net earnings of $235 million ($0.53 per share) compared with $281 million ($0.65 per share) in the fourth quarter of 2011. Amounts in all periods include special items and non-operating pension expense.
Full-year 2012 Operating Earnings were $1.2 billion ($2.65 per share) compared with $1.4 billion ($3.12 per share) in 2011. Operating Earnings in the fourth quarter of 2012 totaled $305 million ($0.69 per share) compared with $319 million ($0.73 per share) in the fourth quarter of 2011.
Annual sales totaled $27.8 billion in 2012 compared with $26.0 billion in 2011. Quarterly net sales were $7.1 billion in the fourth quarter compared with $6.4 billion in the fourth quarter of 2011.
Full-year 2012 business segment operating profits were $2.0 billion compared with $2.2 billion in 2011. Business segment operating profits in the fourth quarter were $528 million compared with $577 million in 2011, both of which included special items.
"Our success capturing merger benefits from the Temple-Inland acquisition contributed to our fourth quarter results and IP's record cash generation from operations in 2012," said John Faraci, Chairman and Chief Executive Officer. "Given our runway levers and ability to execute, we are positioned to deliver a step-change in earnings as we move through 2013."
The performance of the company's business segments are measured quarter to quarter without variations caused by special items, as management focuses on business segment operating profits excluding those items. Fourth quarter 2012 business segment operating profits and business trends compared with the prior quarter are as follows:
Industrial Packaging operating profits in the fourth quarter of 2012 were $368 million ($336 million including special items) compared with $342 million ($255 million including special items) in the third quarter of 2012. The profit increase in North America was the result of improved pricing, partially offset by higher planned outage-related maintenance expenses and input costs. Profits for the segment also benefited from seasonally higher sales volumes in Europe and an insurance settlement related to the earthquake that occurred in Northern Italy.
Printing Papers operating profits were $147 million (before and after special items) in the fourth quarter of 2012 versus $201 million ($202 million including special items) in the third quarter of 2012. North American operations were impacted by higher planned outage-related maintenance expenses, seasonally lower sales and lower average sales price for paper, particularly in export markets. Europe's results were stronger quarter over quarter mainly from lower planned maintenance expenses.
Consumer Packaging operating profits were $39 million ($41 million including special items) in the fourth quarter of 2012 compared with $67 million (before and after special items) in the third quarter of 2012. Earnings were impacted by higher outage-related maintenance expenses and lower average sales price primarily due to mix, along with cost associated with the start-up of the coated paper machine in China.
xpedx, the company's North American distribution business, reported operating profits of $11 million ($4 million including special items) in the fourth quarter of 2012 compared with $24 million ($15 million including special items) in the third quarter of 2012, reflecting higher operating expenses in the fourth quarter.
International Paper recorded Ilim joint venture equity earnings of $8 million in the fourth quarter of 2012, compared with equity earnings of $33 million in the third quarter of 2012. Fourth quarter results were lower as modestly higher average prices did not offset increases in input costs. In addition, the after-tax impact of favorable foreign exchange gains was $15 million less in the fourth quarter compared with the third quarter. The gains in both quarters were due to non-cash adjustments associated with the Ilim joint venture's U.S. dollar denominated debt.
Net corporate expenses, excluding non-operating pension expense, for the 2012 fourth quarter were $15 million compared with $1 million in the third quarter of 2012 and $20 million in the fourth quarter of 2011.
Discontinued operations in both the fourth and third quarters of 2012 included the Operating Earnings of Temple-Inland's Building Products business. Also included are pre-tax charges of $13 million ($8 million after taxes) and $2 million($1 million after taxes) in the fourth quarter of 2012 and the third quarter of 2012, respectively, for expenses associated with pursuing the divestiture of this business.
International Paper and Brazilian corrugated packaging producer Jari Celulose, Embalagens e Papel S.A., a Grupo Orsa company, have finalized the formation of Orsa International Paper Embalagens S.A. The new entity, in which IP will hold a 75 percent stake, includes three containerboard mills and four box plants, which make up Jari's former industrial packaging assets. Today's closing completes the transaction announced in October of 2012.
"International Paper has been in Brazil for over 50 years and we are excited about this partnership as a platform to enter the corrugated packaging business in this strategic region," said John Faraci, Chairman and Chief Executive Officer. "This investment fits our strategy to grow our packaging business globally and allocate capital to opportunities that deliver returns well above our cost of capital."
The value of IP's investment is approximately $470 million at today's exchange rate.