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IP Debt Levels Drop Sharply

June 10, 2009 By: Packaging online staff Box Biz


At an analyst meeting held in New York City last week, International Paper (IP), Memphis, Tenn., disclosed its debt and cash levels as of May 31 dropped more sharply than expected to $9.6 billion versus $10.5 billion on March 31 and $11.8 billion eight months earlier (Sept. 2008), just after the Weyerhaeuser containerboard purchase. So net debt is down $1.7 billion, or $4.00 a share, in just 8 months, notes Chip Dillon, paper industry analyst for Credit Suisse Securities, New York City.

Also at this meeting, IP’s senior vice president of industrial packaging, Carol Roberts, indicated that box volumes for the company jumped 5 percent from March to April and held at these higher levels for May. She indicated that the second half of May was stronger than the first half.

In April, IP realized over $400 million in annualized synergies from the Weyerhaeuser deal, only 8 months after the deal closed and more than a year ahead of schedule. In the first quarter, annualized synergies came in at $336 million. For full-year 2008, IP now sees $415 million in synergies, with another $85 million in 2010. In addition, the company sees opportunities to take out $200 million in mill costs and $100 million in box plant costs over the next few years.

 
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