International Paper Company · NYSE:IP
International Paper — International Paper Co /New/ — Q3 2004 Earnings Presentation
24 slides from International Paper's earnings presentation, Oct 26, 2004
Slide 1: Third Quarter 2004 Review
John V. Faraci Chairman & CEO Christopher P. Liddell SVP & CFO Third Quarter 2004 Review October 26, 2004
Slide 2: Forward Looking Statements
Forward Looking Statements Statements on these slides or in this presentation that are not historical are forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including but not limited to, uncertainty as to whether the sale of
Slide 3: Statements Relating to Non-GAAP Financial Measures
Statements Relating to Non-GAAP Financial Measures D uring the course of this presentation, certain non- U.S. GAAP financial information will be presented. A reconciliation of those numbers to U.S. GAAP financial measures is available on the company’s website at www.internationalpaper.com under Inve
Slide 4: Agenda
Agenda Third Quarter Review Business Performance Outlook
Slide 5: Third Quarter 2004 Summary
Third Quarter 2004 Summary Revenues growing, volumes remained strong, reflecting healthy demand Continued to implement IP announced price increases Raw material costs remained high and rising Negative impact on earnings from hurricanes Continued to focus on non-price improvement
Slide 6: IP Net Sales Revenue
IP Net Sales Revenue 1Q 3Q 1Q 2Q 4Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q $B 3Q’04 highest net sales revenue since 1Q’01 5.5 6.5
Slide 7: EPS from Continuing Operations and Before Special Items
EPS from Continuing Operations and Before Special Items* 1Q 1Q 3Q 1Q 3Q .75 .49 .24 2Q .03 .59 4Q 2Q 4Q .11 .11 .11 .11 .32 2Q 3Q 4Q 1Q 2Q .32 3Q .30 4Q .14 1Q * A reconciliation to GAAP EPS is available at www.internationalpaper.com under Investor Information .20 .22 .20 .12 2Q .43 .33 3Q
Slide 8: 3Q'04 vs. 2Q'04 EPS from cont. ops. before special items
3Q’04 vs. 2Q’04 EPS from cont. ops. before special items ($.03) EPS $ / Share $.33 $.04 ($.01) $.01 ($.03) Wood Costs $0.00 Energy ($0.01) Other ($0.02) 2Q’04 Tax Rate 31% 3Q’04 Tax Rate 29% Paper/Pkg. $0.15 Wood Prod ($0.05) $.10 $.43 $.00 $.02 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 2Q'04 Price
Slide 9: 9M'04 vs. 9M'03 EPS from cont. ops before special items
9M’04 vs. 9M’03 EPS from cont. ops before special items $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 9M'03 Price Volume Cost/Mix Raw Material Hurricane Land Sales Interest Tax Pension Other 9M'04 ($.14) EPS $ / Share $.56 $.28 $.13 ($.05) ($.03) $.19 Sep’03 Tax Rate
Slide 10: Impact of Higher Raw Material Cost
Impact of Higher Raw Material Cost EBIT impact 2004 vs. 2002 (200) (160) (120) (80) (40) Wood Natural Gas LDPE Oil/Coal EBIT ($) (140) (55) (30) (175) (30) Material costs $430 million negative EBIT impact 2004 full year estimate versus 2002 Caustic/ Other
Slide 11: Cost Reduction Initiatives Reducing purchased energy consumption
Cost Reduction Initiatives Reducing purchased energy consumption Purchased energy consumption in key businesses reduced by 8-10% since 2002 Printing Papers Bleached Board 2004 YTD OSC
Slide 12: Earnings and ROI Improving
Earnings and ROI Improving 3Q’04 3.6 5.0 2Q’04 3.2 4.2 2.9 3.8 EBITDA ($B) ROI (%) Annualized
Slide 13: Printing Papers
Printing Papers $ 1,920 Sales Earnings 3Q’04 2Q’04 $ Millions Uncoated* Coated* Pulp* Europe (1%) 8% 1% (2%) 3Q’04 Change vs 2Q’04: Volume Realizations/ton * U.S. operations only Average IP realization (includes the impact of mix across all grades) Europe is average commodity cut size price excludin
Slide 14: Packaging
Packaging $ 2,005 Sales Earnings 3Q’04 2Q’04 $ Millions Containerboard U.S. Container Bleached Board $40 $40 $15 Volume Realizations/ton $ 1,775 3Q’04 Change vs 2Q’04: Average IP realization (includes the impact of mix across all grades) 5% 21% 1%
Slide 15: Forest Products
Forest Products $ 600 Sales Earnings 3Q’04 2Q’04 $ Millions Lumber (mbf) Plywood (msf) 2% 2% ($5) ($65) Volume Realizations/unit Average IP realization (includes the impact of mix across all grades) $ 625 3Q’04 Change vs 2Q’04:
Slide 16: Reconciliation to Net Earnings
Reconciliation to Net Earnings Per share ($1.13) Net Earnings Earnings from Continuing Operations and Before Special Items $0.43 Special Items 0.00 Earnings from Continuing Operations $0.43 Discontinued Operations (Weldwood) ($1.56)
Slide 17: Special Items & Discontinued Operations – 3Q04
Special Items & Discontinued Operations – 3Q04 $MM EPS Special Items Insurance Recove ries Divestitures (38) Restructuring & Others (49) Tax & Min. Int. Impact of Above (17) Special Items Total (1) (0.00) Discontinued Operations (Weldwood) Loss on Sale (385) Tax Expense (410) 3Q’04 Earnings (757) (1
Slide 18: Outlook
Outlook Demand remains solid Previously announced IP paper and packaging price increases continue to be implemented Higher prices in paper and packaging partly offset by lower prices in wood products and higher raw material costs Operations improving 4Q’04 corporate expenses ~ $130 million; Tax rate
Slide 19: International Paper
INTERNATIONAL (B) PAPER
Slide 20: International Paper
INTERNATIONAL (B) PAPER
Slide 21: Average Sales Realizations
Average Sales Realizations * U.S. only. Uncoated excludes fine papers Forest Products $/ton Packaging $/ton Printing Papers* 3Q’03 Segments 3Q’04 Average Sales Realizations 2Q’04 Sept 2004 Plywood, $/MSF Lumber, $/MBF Corrugated boxes Containerboard Pulp Coated Uncoated Grades Average IP realization
Slide 22: Hurricane Impact 3Q'04 Earnings impact by segment
Hurricane Impact 3Q’04 Earnings impact by segment Paper Packaging Forest Products Other $ (11) (2) (3) (2) Total $ (18) $ Millions
Slide 23: 2004 Earnings from Continuing Operations
2004 Earnings from Continuing Operations MI – Minority Interest; Net – Net Income; ETR – Effective Tax Rate; EPS – Earnings per Share * A reconciliation to GAAP EPS is available at www.internationalpaper.com under Investor Information Pre-Tax $ MM Tax $ MM MI $ MM ETR Avg. Shares MM Shares EPS $/Sha
Slide 24: International Paper
INTERNATIONAL ((\) PAPER
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