International Paper Co, the packaging producer trying to buy rival Temple-Inland Inc., posted a better-than-expected quarterly profit as it cut costs to offset tenuous demand.
The weak economy has taken a bite out of packaging and paper sales, especially in North America where 70 percent of IP’s business is centered. So far in the first quarter, business activity has improved, but not to levels seen after prior recessions, Chief Executive John Faraci told Reuters
“The emerging markets – Brazil, India, Russia, China – they may have slowed a bit, but they’re still growing,” Faraci said. “In North America I’d say we have a recovering, but far from fully recovered economy
For the fourth quarter, the company posted net income of $257 million, or 59 cents per share, compared with $316 million, or 74 cents per share, in the year-ago period.
Excluding one-time items, the company earned 66 cents per share.
Revenue slipped 2.5 percent to $6.37 billion. Analysts expected revenue of $6.49 billion.
Operating profit at the company’s printing papers unit slipped 20 percent to $189 million, but rose at the company’s three other units.
The printing papers unit saw higher costs to heat plants during the cold fourth quarter, but Faraci said that so far the relatively warm first quarter has required little heat at the plants.
Last week IP said it had agreed with the U.S. Department of Justice to further extend the regulatory review period for its $3.7 billion bid for Temple-Inland.
“We anticipate entering into a definitive agreement on terms acceptable to all parties,” Faraci said on Thursday. “I’m very pleased with where we’re headed.”