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International Paper Company IP reported first-quarter 2025 adjusted earnings of 23 cents per share, missing the Zacks Consensus Estimate of 35 cents. The bottom line improved 35% year over year, driven by the DS Smith acquisition and price increases.
IP posted a net loss per share of 24 cents from continuing operations in the first quarter, including one-time items, such as combination costs related to the acquisition of DS Smith, severance costs, environmental remediation adjustments, Global Cellulose Fibers strategic options costs and gain on sale of fixed assets. The company posted earnings of 16 cents in the year-ago quarter.
Net sales were $5.9 billion in the quarter under review, up 27.8% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $6.6 billion. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
International Paper Company Price, Consensus and EPS Surprise
International Paper Company price-consensus-eps-surprise-chart | International Paper Company Quote
International Paper’s Q1 Gross Margin Rises Y/Y
The cost of sales was $4.25 billion in the quarter under review, up 24.4% from the year-ago quarter’s $3.42 billion. Gross profit rose 37.4% year over year to $1.64 billion. The gross margin came in at 27.8% compared with the year-ago quarter’s 25.9%.
Selling and administrative costs were $530 million, which increased 48% from $358 million in the prior-year quarter. Adjusted operating profit in the quarter was $101 million, which marked a 65.6% surge from $61 million in the first quarter of 2024.
IP’s Segment Performances in Q1
On Jan. 31, 2025, International Paper completed the previously announced acquisition of DS Smith, forming a global leader in sustainable packaging solutions with a focus on the North America and EMEA markets. As a result, the company will now operate its financial results in three segments — Packaging Solutions North America, Packaging Solutions EMEA and Global Cellulose Fibers.
Packaging Solutions North America: The segment’s sales were $3.7 billion, up 6.2% from the last-year figure due to the addition of DS Smith North America business. Sales were also driven by higher sales prices for boxes, partially offset by seasonally lower volumes and softer-than-expected box demand. Our projection for the segment’s sales was $3.8 billion. Operating profit fell 26% year over year to $142 million. Our model anticipated an operating profit of $285 million.
Packaging Solutions EMEA: The segment’s sales were $1.55 billion, up from the last-year figure of $0.35 billion due to the addition of the DS Smith EMEA business. Our projection for the segment’s sales was $2.43 billion. Operating profit soared 91.7% year over year to $46 million. Our model anticipated an operating profit of $88 million.
Global Cellulose Fibers: The segment’s sales declined 8.7% year over year to $643 million in the first quarter, attributed to lower prices and lower volumes. We predicted sales of $608 million for the segment. The segment reported an operating profit of $17 million in the quarter against the operating loss of $47 million incurred in the year-ago quarter. Our model anticipated an operating profit of $19.5 million.