International Paper Co. posted a higher-than-expected third-quarter profit Thursday as lower costs helped offset a slight dip in sales of packaging.
IP effectively did more with less during the quarter, cutting plant maintenance, timber and office expenses.
“Making more money on flat revenues is a sign of a company that’s got a lot of ways to improve, even in a challenging economic environment,’’ IP Chief Executive John Faraci told Reuters.
Net income rose to $518 million, or $1.19 per share, from $397 million, or 91 cents per share, a year earlier.
Excluding restructuring charges and other one-time items, the company earned 92 cents per share. Revenue fell 1 percent to $6.63 billion. Analysts expected $6.78 billion.
Sales of industrial packaging improved slightly, while sales of printing papers were flat. Sales of consumer packaging rose 10 percent, mirroring similar results from rival MeadWestvaco.
IP clinched smaller rival Temple Inland last month in a $3.7 billion deal, cementing its position as the leader of the North American corrugated packaging market.
The deal is expected to close by the end of the year, but still requires approval from the U.S. Department of Justice.
“We’re confident we will get that in a short period of time,’’ Faraci said.
In addition to the Temple deal, IP is spending heavily to expand in Russia and India.
From Faraci’s perspective, it’s only logical to build plants where demand for IP’s products is growing.
“We’ve got a lot of things on our plate that will improve IP, even in a challenging environment,’’ he said.
In the United States, where IP has shrunk in the past 20 years, Faraci said demand must return before the company hires more workers.
“Demand has to come first, jobs come second,’’ Faraci said. “We worry a bit as we approach the election year that politics will compete with sound financial policy.’’