By: The Working Forest Staff
Fourth-quarter net earnings (loss) attributable to International Paper of $107 million ($0.28 per diluted share) compared with $864 million ($2.20 per diluted share) in the third quarter of 2021 and $153 million ($0.39 per diluted share) in the fourth quarter of 2020. Third-quarter 2021 net earnings include a net after-tax gain of $350 million ($0.89 per diluted share) on the sale of our Kwidzyn, Poland mill. Fourth-quarter adjusted operating earnings* (non-GAAP) of $301 million ($0.78 per diluted share) compared with $431 million ($1.10 per diluted share) in the third quarter of 2021 and $206 million ($0.53 per diluted share) in the fourth quarter of 2020.
- Full-year net earnings (loss) attributable to International Paper of $1.8 billion ($4.47 per diluted share) compared with $482 million ($1.22 per diluted share) for full-year 2020. Full-year adjusted operating earnings* (non-GAAP) of $1.3 billion ($3.20 per diluted share) compared with $848 million ($2.14 per diluted share) for full-year 2020.
- Fourth-quarter cash provided by operations of $107 million, including approximately $240 million of income tax payments related to 2021 monetization transactions and approximately $60 million payroll tax payments related to the CARES Act. Full-year 2021 cash from operations of $2.0 billion compared with $3.1 billion for full-year 2020.
- Ilim equity earnings of $66 million, bringing full-year to $311 million
- Focused our portfolio, strengthened our balance sheet, and returned significant cash to our shareowners: Debt reduction of $1.4 billion, bringing full-year to $2.5 billion; Share repurchases of $413 million, bringing full-year to $811 million; Qualified pension plan fully funded
- Initiated meaningful actions to accelerate profitable growth and materially lower our cost structure.
“In 2021, International Paper grew revenue and earnings in a highly challenging operating and cost environment,” said Mark Sutton, Chairman and Chief Executive Officer. “Throughout 2021, we serviced strong customer demand while managing through significant operational and supply chain constraints. We focused our portfolio around corrugated packaging and initiated meaningful actions to accelerate profitable growth and materially lower our cost structure. Additionally, we returned $1.6 billion to shareowners through strong cash generation and reduced debt by $2.5 billion.”
Sutton added, “As we enter 2022, underlying customer demand remains solid, although we anticipate near-term pressure on volume due to Omicron-related labor and logistics constraints on the value chain. We expect to grow earnings in 2022 and are confident in our ability to accelerate value creation for our shareowners and customers as we take actions to Build a Better IP.”
Business segment operating profits are used by International Paper’s management to measure the earnings performance of its businesses and is calculated as set forth in footnote (h) below under “Sales and Earnings by Business Segment”. As a result of the spin-off of our global Printing Papers business on October 1, 2021, the Printing Papers business segment has been eliminated and all current and prior year amounts have been adjusted to reflect this business as a discontinued operation. For discussion of discontinued operations, see the disclosure under Discontinued Operations included later in this release. Fourth-quarter 2021 net sales by business segment and operating profit (loss) by business segment compared with the third quarter of 2021 and the fourth quarter of 2020 along with full-year 2021 net sales by business segment and operating profit (loss) by business segment compared with full-year 2020 are as follows:
Industrial Packaging operating profits (losses) in the fourth quarter of 2021 were $414 million compared with $414 million in the third quarter of 2021. In North America, earnings increased reflecting higher sales prices for corrugated boxes and containerboard. Sales volumes were stable for corrugated boxes and increased for containerboard. These benefits were partially offset by increased distribution, wood fiber, recovered fiber, and energy costs. Earnings in the fourth quarter of 2021 benefited from insurance recoveries. In Europe, earnings slightly improved reflecting seasonally higher volumes primarily in Morocco, mostly offset by higher energy costs. Average sales margins improved driven by an improved product mix.
Global Cellulose Fibers
Global Cellulose Fibers operating profits (losses) in the fourth quarter of 2021 were $1 million compared with $76 million in the third quarter of 2021. Earnings decreased primarily driven by higher planned maintenance outage expenses and input costs for energy and chemicals. Average sales prices were stable for fluff pulp and lower for market pulp. Sales volumes were slightly lower. Operating costs were higher driven by the non-repeat of favorable items in the third quarter of 2021. Distribution costs increased, reflecting the continued challenging export supply chain environment.
Equity Method Investments
Ilim joint venture equity earnings (loss) were $66 million in the fourth quarter of 2021 compared with $95 million in the third quarter of 2021. Operationally, earnings decreased reflecting lower export sales prices for softwood pulp and hardwood pulp and domestic sales prices for containerboard. Lower maintenance outage expenses were more than offset by higher other costs.
Corporate expenses were $49 million for the fourth quarter of 2021, compared with $13 million in the third quarter of 2021.
Effective Tax Rate
The reported effective tax rate for the fourth quarter of 2021 was (11)%, compared to a 2021 third-quarter reported effective tax rate of 15%. The reported effective tax rate in the fourth quarter reflects tax benefits recognized after the finalization of the 2020 state and local income tax returns. The effective tax in the fourth quarter also includes the tax benefit associated with the $238 million of debt extinguishment costs. The tax rate in the third quarter of 2021 reflects tax benefits recognized after the finalization of the 2020 U.S. Federal income tax return.
Excluding special items and non-operating pension expenses, the operational effective tax rate for the fourth quarter of 2021 was 20%, compared with 15% for the third quarter of 2021.
Effects of Special Items
Net special items in the fourth quarter of 2021 amount to a net after-tax charge of $222 million ($0.58 per diluted share) compared with a charge of $37 million ($0.09 per diluted share) in the third quarter of 2021 and a charge of $149 million ($0.38 per diluted share) in the fourth quarter of 2020.
Discontinued operations include the operating earnings of our former Printing Papers segment and EMEA Coated Paperboard and Pulp business including the Kwidzyn, Poland mill, divested in the third quarter of 2021.
For the full fourth-quarter results, click here.
About International Paper
International Paper is a leading global supplier of renewable fiber-based products. We produce corrugated packaging products that protect and promote goods and enable worldwide commerce, and pulp for diapers, tissue, and other personal care products that promote health and wellness. Headquartered in Memphis, Tenn., we employ approximately 38,000 colleagues globally. We serve customers worldwide, with manufacturing operations in North America, Latin America, North Africa and Europe. Net sales for 2021 were $19.4 billion. In Russia, we have a 50/50 joint venture, Ilim Group, the country’s largest integrated manufacturer of pulp and paper. Additional information can be found by visiting InternationalPaper.com.
Source: International Paper Company