International Paper (IP) announced on Thursday that while its third-quarter profits were lackluster, they nonetheless surpassed market expectations. Additionally, the company revealed its decision to reassess strategic options for its Global Cellulose Fibers (GCF) division. This move aligns with IP's overarching strategy to concentrate on sustainable packaging solutions.
Ahead of market hours on the NYSE, International Paper shares saw an increase of approximately 7.1%, reaching a trading price of $52.51.
The company, known for producing sustainable packaging, pulp, and other fiber-based products, also declared the permanent closure of its Georgetown, South Carolina, facility. The shutdown will occur in phases, with a complete closure anticipated by the end of 2024, affecting 526 hourly and 148 salaried staff members.
IP's GCF division produces high-quality absorbent pulp used in various health and wellness products, including feminine care and incontinence items. In 2023, this segment generated $2.9 billion in revenue and operates across three countries with eight mills and two converting facilities.
The company noted that the strategic review of the GCF division is in its preliminary stages, with no guarantees regarding any transactions or outcomes.
The Georgetown mill currently produces approximately 300,000 tons of fluff pulp annually for a variety of consumer products, including baby diapers and incontinence items. GCF intends to maintain its entire fluff pulp capacity by reallocating production to other facilities, thereby further minimizing the company's reliance on commodity pulp grades.
All affected employees will receive severance packages, career transition services, and access to mental health support.
During its third quarter, International Paper reported earnings of $150 million, or $0.42 per share, compared to $165 million, or $0.47 per share, from the previous year. Adjusted earnings stood at $153 million, or $0.44 per share. This exceeded analysts’ expectations of $0.26 per share, based on data from Thomson Reuters, which typically excludes special items.
The company's revenue for the quarter increased by 1.6%, reaching $4.686 billion compared to $4.613 billion from the previous year.
