International Paper Revenue Fall by 3.6%

30 April 2015

China's economy appears worse on the ground than the reported economic numbers suggest, said International Paper's chief financial officer, Carol Roberts.

"China feels slow to us," said Ms. Roberts, in an interview. Noting that industrial demand in the country feels weak, she added. "It feels less than what gets reported."

Paper and packaging company International Paper receives about 6.5% of its revenue from China, where it has 17 industrial containerboard plants. The company also has a joint venture in the country, which produces packaging for consumer products.

China reported first-quarter growth of 7% earlier this month, the worst in six years. But several experts have since said the number is likely overstated and could be below 6% a year, tantamount to a major slowdown in growth.

Ms. Roberts added that Brazil, "in full-blown recession," will feel some pain this year. Brazil's government has forecast a contraction of 0.9% for 2015.

"We'll suffer through that," she said.

International Paper has industrial packaging plants in Brazil, as well as printing paper plants, and owns forestland in the South American country.

The company also has a joint venture in Russia. Ms. Roberts said, although that economy is also struggling, the company benefitted because it has local production plants there that can supply the economy. Meanwhile, imports from competitors are getting more expensive due to the weak ruble currency.

"We're running full out in Russia," she said.

The weak prospects for global growth didn't hurt the company very much during the first quarter. The company reported first-quarter earnings of 74 cents a share, although revenue fell below expectations.

Ms. Roberts said the revenue drop was a result of foreign exchange translation, as a stronger dollar meant that international sales were worth less to the company.

 

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