Company Reports

No-moat-rated International Paper reported underwhelming first-quarter results as net sales fell 8% year over year, with both segments experienced declines in the quarter. This was largely driven by lower volumes as pricing recovered well. Destocking headwinds, which have weighed on both segments, continue to improve in North America, and it appears the worst is likely behind the company. That said, corrugated packaging end markets remain pressured, and we expect higher input costs, mainly for old corrugated containers, or OCC, will likely pressure margins over the next few quarters. As such, we've decreased our fair value estimate to $40 from $41 per share due to lower near-term revenue and profitability in our forecast.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Europe, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising costs have weighed on profitability in recent years.

International Paper announced on April 16 that it had reached an agreement to acquire DS Smith, one of the largest corrugated packaging producers in Europe. This news comes a few weeks after International Paper made its initial offer to acquire DS Smith, which was valued at $7.22 billion in an all-stock deal. The deal will have International Paper issue 0.1285 shares for each share of DS Smith at a value of GBX 415 per share, which would result in 66.3% ownership for International Paper shareholders and 33.7% ownership for DS Smith shareholders. Barring any issues, management expects the deal to close in the fourth quarter of 2024. The geographic diversity of International Paper and DS Smith’s operations give us greater confidence that the deal will receive the necessary regulatory approvals. That said, we think synergies will be limited as regional overlap generally drives synergies in containerboard-related deals. We think the deal is largely value neutral, and as such, we are maintaining our $41 per share fair value estimate.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Europe, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising costs have weighed on profitability in recent years.

London-based DS Smith announced on March 26 that it was engaged in discussions with International Paper concerning a potential takeover bid. It is currently reported that International Paper made an all-share offer, where DS Smith shareholders would receive 0.1285 shares of International Paper for every share of DS Smith they own. This offer would value DS Smith at $7.22 billion, which would represent a sizable premium for the company. We are maintaining our $41 fair value estimate until an official agreement is reached.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Europe, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising costs have weighed on profitability in recent years.

No-moat-rated International Paper reported lackluster fourth-quarter results that came with few surprises. Net sales in the fourth quarter fell over 10% year over year as both segments saw declines amid lower pricing across much of the business. Management noted that inventory destocking headwinds that weighed on volumes for much of 2023 have largely abated, and the industrial packaging segment experienced volume growth in the fourth quarter. Despite pricing headwinds, we are encouraged by improvements in destocking trends, which could provide a runway for volume growth in 2024. As such, we maintain our $41 per share fair value estimate.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Europe, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising costs have weighed on profitability in recent years.

No-moat-rated International Paper reported mixed third-quarter results as lower pricing across its business offset relatively stable volumes in the quarter. Net sales decreased 14.5% as both segments reported double-digit declines amid considerable pricing pressure. Destocking continues to be the story for International Paper as inventory management initiatives directly affect demand for packaging. That said, management noted sequential improvements in destocking trends, which could provide some relief going into 2024. As such, we've decreased our fair value estimate to $41 from $42 per share due to lower near-term revenue in our forecast.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Europe, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising costs have weighed on profitability in recent years.

No-moat-rated International Paper reported second-quarter results that were largely in line with our expectations. Revenue decreased 13% year over year as both segments experienced double-digit declines amid additional inventory destocking during the quarter. That said, management noted a recent slowdown in destocking and expects much of the trend to be behind the firm, which could provide a tailwind for volume growth in the second half of the year. Consolidated operating margins declined 300 basis points from a year ago to 7.0%, as the pullback in volumes was met with lower prices across IP’s portfolio. As such, we've decreased our fair value estimate to $42 from $44 per share due to lower near-term revenue and profitability in our forecast.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Europe, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising costs have weighed on profitability in recent years.

International Paper reported lackluster first-quarter results as a decline in volumes was met with lower prices in the company’s packaging business. Revenue decreased 4% year over year as top-line strength in its fiber business was not enough to offset packaging declines. Elevated operating costs continued to weigh on the firm, with consolidated operating margins contracting 140 basis points from a year ago to 5.9%, despite benefits from recent cost management initiatives. Both segments continue to feel the effect of inventory destocking and moderating consumer spending, and we expect similar demand constraints to persist throughout the year. Nevertheless, we are maintaining our $44 fair value estimate.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, Russia, India, and China, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising costs have weighed on profitability in recent years.

International Paper reported fourth-quarter results that were largely in line with our expectations. Revenue increased 1% year over year in the fourth quarter as declining volume was offset by higher selling prices. Fourth-quarter segment operating margin improved roughly 30 basis points year over year to 8.8%. While International Paper was again impacted by elevated operating costs, fourth-quarter earnings benefited from meaningfully lower input costs.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, Russia, India, and China, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising input costs have weighed on profitability in recent years.

International Paper reported third-quarter results that were largely in line with our expectations. Revenue increased 10% year over year and was roughly flat sequentially as higher selling prices offset another quarter of declining volume. While International Paper continues to make pricing gains, higher operating and input costs weighed on margins during the quarter. Consolidated operating margins contracted 150 basis points from a year ago to 7.2%. We are maintaining our fair value estimate of $52 per share.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, Russia, India, and China, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising input costs have weighed on profitability in recent years.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, Russia, India, and China, more than three fourths of its sales come from North America. A decade of consolidation in the corrugated packaging industry has allowed International Paper to raise prices and expand margins, but increased competitive intensity and rising input costs have weighed on profitability in recent years.

International Paper posted strong second-quarter results as end-market demand drove top-line growth and margin expansion. Revenue increased 13% year over year and 3% sequentially as higher prices offset a slight decline in volume. Despite continued supply chain challenges and raw material inflation, consolidated operating margins expanded roughly 400 basis points to 10% as selling price increases were realized. We are maintaining our fair value estimate of $52 per share.