Sluggish economy hurts IP High energy costs blamed in net loss

NEW YORK – International Paper Co. blamed a struggling economy and higher energy costs for a net loss of $44 million, or 9 cents per share in the first quarter.

The world’s largest paper company, whose Maine holdings include mills in Bucksport and Jay, said Wednesday it earned $24 million, or 5 cents a share, before special and extraordinary items.

That matches the expectations of analysts, but marks a drop in earnings of more than 90 percent compared with the same period a year ago.

“The continuation of a dramatic slowdown of orders due to a very weak U.S. economy and strong U.S. dollar hammered domestic profitability and export competitiveness,” the company said.

International Paper, which is based in Purchase, N.Y., but will move its headquarters to Stamford, Conn., next month, also cited higher energy costs, lower production volume and pricing pressures for its problems, compounded by short-term operating difficulties at some of its larger mills.

But John Dillon, the company’s chairman and chief executive, said the company was working to hone its focus in anticipation of an eventual turnaround in the economic climate.

“We are matching our production to our orders, which has led to reductions in inventories. We are focusing on our three core businesses – paper, packaging and forest products – and are reinforcing relationships with our customers,” Dillon said. “And our continuing internal improvement effort will give International Paper a superior competitive position when the business outlook improves.”

The first quarter net loss compares with net earnings of $378 million, or 91 cents per share, in the same period a year ago.

The company’s first-quarter sales improved to $6.9 billion from $6.4 billion in the year ago period.

IP said its coated and supercalendered papers business was hurt by a downturn in advertising. Weaker demand also hurt its printing and communications papers business, and its distribution business was hurt by lower volume in commercial printing.

Increased competition and weaker demand for bleached board cut into earnings in its consumer packaging business, although prices remain steady, the company said. A slowdown in orders also resulted in 20 cutbacks in production, which hurt earnings in the industrial packaging business, International Paper said.

The forest products business improved, but has been hurt by depressed lumber prices, the company said. IP said its European business remains stable, with the exception of weak demand for pulp and pricing pressures.