Pulp, Paper & Wood Industry Shows Improvement as Major Players Report Earnings

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Researched by Industrial Info Resources (Sugar Land, Texas)--Paper and forest products companies Weyerhaeuser Company (NYSE:WY) (Federal Way, Washington), International Paper Company (NYSE:IP) (Memphis, Tennessee) and Sappi Limited (NYSE:SPP) (Johannesburg, South Africa) recently reported quarterly earnings, revealing growth both sequentially and on a year-over-year basis. Jacksonville, Florida-based Rayonier (NYSE:RYN) boasted a 33% increase in second-quarter sales. The company's Performance Fibers segment increased $25 million from 2Q09 to $202 million. Although Clearwater Paper Corporation's (NYSE:CLW) (Spokane, Washington) year-over-year net profits were down because of lack of an alternative fuels tax credit, the company's net sales were up 8.5% from the same time last year.

"We significantly improved our earnings in the second quarter," said International Paper Chairman and CEO John Faraci in conference call. "Before special items, earnings more than doubled versus the second quarter of 2009, and they were far better than the earnings in Q1, which is the low point for International Paper." International Paper's earnings before special items was $181 million, compared to $86 in the same quarter of the previous year, and $16 million in the first quarter of 2010.

Operating profits across all of International Paper's segments showed significant improvement from the first quarter. Excluding special items, operating profits were as follows:

• Industrial Packaging - $193 million, up from $46 million in 1Q10
• Printing Papers - $158 million, up from $126 million in 1Q10
• Consumer Packaging - $49 million , up from $31 million
• Forest Products - $40 million, up from $8 million

Weyerhaeuser's results were similarly positive. Net earnings for the second fiscal quarter were $14 million, compared to a loss of $20 million in the previous quarter. The company's Forest Products segment, which produces lumber, boards and plywood, had net sales and revenues of $789 million, up 31% from the first quarter's $604 million. Weyerhaeuser's Cellulose Fibers segment had sales and revenues of $468 million, compared to $410 million in the first quarter of the fiscal year.

South African paper company Sappi's third-quarter earnings also showed improvement from both the previous quarter and the same quarter of the previous year. Operating profit was $154 million, compared to $28 in the previous quarter and a loss of $7 million in 3Q09.

The company's sales were up substantially year over year. North American sales rose 19% from 3Q09 to $347 million, while European sales rose 20% to $873 million. The company showed its largest gains in the Southern Africa region, with sales rising 29% to $382 million. "As we've mentioned in our previous quarters, our domestic business has really had a tough time in the first half of our financial year, but we've seen a nice turnaround, particularly in the kraft business, but also in our fine paper business," said Sappi CEO Ralph Boëttger in a conference call. "We are actually more optimistic of our business than we have been for quite some time."

Industrial Info is tracking more than $32 billion of Pulp, Paper & Wood Industry projects throughout the world. Recently added to Industrial Info's International Industrial Project Database is Weyerhaeuser's $70 million expansion of a paper mill in Uruguay, construction of which is expected to kick off by the end of this year. For additional information, see August 2, 2010, article - Weyerhaeuser Expands Production Capacity at Uruguayan Plywood Mill. Clearwater has begun site preparation on a tissue mill in North Carolina, details of which can be found in July 23, 2010, article - Clearwater Breaks Ground for Tissue Mill in North Carolina.

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