Containerboard makers producing black ink

International Paper, PCA, Smurfit Kappa report second quarter profits.

July 31, 2015
Recycling Today Staff

Three large-volume paper and containerboard producers have reported second quarter 2015 earnings that show sustained sales and profitability figures.

International Paper (IP), Memphis, Tennessee; Packaging Corp. of America (PCA), Lake Forest, Illinois; and Ireland-based Smurfit Kappa all released second quarter and first half 2015 earnings reports in late July.

IP has reported sales of $5.7 billion in the second quarter of 2015 compared with $5.5 billion in the first quarter of 2015 and $5.9 billion in the second quarter of 2014. The company’s operating profits in the second quarter of 2015 were $663 million, compared with $623 million in the first quarter of 2015 and $686 million in the second quarter of 2014.

Although profits have remained relatively stable, the company says “revenues continue to be negatively impacted by foreign exchange translation.”

“IP delivered another strong quarter of earnings and free cash flow,” says Mark Sutton, IP chairman and CEO. “Our North American Industrial Packaging business performed very well on seasonally higher sales and increased margins. Operations around the globe ran well and we executed our heaviest quarter of maintenance outages safely and effectively. As we look forward, we are confident in our ability to continue to deliver strong results and remain focused on long term value creation for our shareholders.”

IP employs approximately 58,000 people at paper mills and other facilities and offices in more than 24 countries in North America, Europe, Latin America, Russia, Asia and North Africa.

PCA has reported record second quarter 2015 income of $114 million, or $1.16 per share, compared to 2014 second quarter net income of $100 million, or $1.01 per share.

“We had an outstanding quarter operationally in both our mills and box plants, which increased earnings significantly over prior guidance,” says Mark W. Kowlzan, PCA’s CEO. “In corrugated products, our sales mix improved seasonally more than we expected, contributing to higher earnings. We also continued to improve operations and lower costs in our white paper mills, which offset some of the impact of lower paper prices.”

“Looking ahead to the third quarter, we expect higher containerboard, corrugated products and white paper shipments, lower mill annual outage costs and lower chemical costs,” says Kowlzan.

PCA bills itself as the fourth largest producer of containerboard and corrugated packaging products in the United States and the third largest producer of uncoated freesheet paper in North America. It operates eight mills and 94 corrugated products plants and related facilities.

Ireland-based Smurfit Kappa, which operates four packaging grade mills and facilities and eight recycling plants in the U.S., has reported an improved earnings per share (EPS) figure for its overall global operations in the first half of 2015. The company’s revenue of €4.00 million ($4.37 million) in the first half of 2015 increased by 1 percent from the €3.95 million ($4.32 million) figure in the first half of 2014.

“In the first half of the year the group delivered EPS growth of 38 percent, underpinned by good underlying business conditions, significantly reduced long-term funding costs and the earnings impact of capital investments, acquisitions and efficiency programs completed within the last 12 months,” says Gary McGann, Smurfit Kappa’s CEO.

“The group’s operations in the Americas are performing well and the integration of the recently acquired corrugated packaging businesses in the U.S., Central America, Colombia and Dominican Republic is progressing as planned,” says McGann. “The group will continue to seek to expand its strong position across this region through accretive acquisitions and organic business growth, and expects [profit] margins to continue to improve through the second half as corrugated price increases are implemented, particularly in the major markets of Colombia and Mexico.”

McCann says he foresees a tight containerboard supply picture emerging in Europe. “European corrugated packaging volumes have remained strong, delivering volume growth of over 4 percent in the first half of 2015. As a consequence of this consistently good growth, a balanced supply/demand environment and upward pressure in recovered paper prices, the European containerboard market has continued to tighten. As a result the group has sought and is achieving virgin and recycled containerboard price increases and these increases are expected to support higher corrugated pricing at the back end of the year and into 2016.”

Smurfit Kappa employs about 43,000 people designing, manufacturing and selling packaging products at some 350 production sites in 33 nations.