Paper Giant’s Profits Triple
International Paper Co., the world’s biggest paper and forest products company, today said its fiscal second-quarter net income more than tripled on higher pulp and paper prices and cost savings from recent mergers, beating analysts’ expectations.
Profits in the three months ended June 30 rose to $315 million, or 75 cents per diluted share excluding a $45 million charge after tax on facility closure and severance reserves following its takeover of Champion International. This compared to profits of $99 million, or 24 cents a share, in the year-ago quarter excluding extraordinary items. Revenues in the latest period rose about 12 percent to $6.8 billion from $6.0 billion in the year-ago quarter.
Analysts polled by First Call/Thomson Financial had forecast earnings of 74 cents per share in the latest quarter.
The company, which this spring agreed to acquire Champion International for $7.3 billion in cash and stock, has benefited from higher pulp prices and higher container prices in the quarter, analyst Mark Wilde of Deutsche Banc Alex. Brown. “For IP, the big horse is paper, and in this quarter, the big horse will be better than last quarter,” he said before the announcement.
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Rite Aid Revises Results Lower
Cleaning up an accounting debacle that drove its stock down 70 percent, Rite Aid Corp. revised its 1997 and 1998 results lower by more than $1 billion.
The company, the nation’s third-largest drug store chain, also reported a wider loss in the fiscal first quarter and for the previous year.
The restated figures, released after the close of markets Tuesday, gave investors and analysts their first real look at the troubled company’s financial status since Rite Aid announced last fall it could no longer provide reliable profit forecasts due to accounting difficulties.
Rite Aid said its loss from the quarter ended May 27 came in at $238 million, or 92 cents a share, compared with a net loss of $44 million, or 17 cents, for the restated first quarter of the previous fiscal year.
Revenues for the first quarter of this year rose to $3.8 billion from a restated $3.6 billion in the same period last year.
Chief executive Robert Miller attributed the problems to the old management’s expansion program, which he said was “overly aggressive,” and said those problems should not continue under his management.
Miller said the next step for the company will be getting down to the basics to attract more customers.
“Now it’s Retail 101 — treat employees right, have a good advertising program, be in stock,” Miller said Tuesday night. “We expect to see good improvements in the third and fourth quarter.”
For 1999, Rite Aid restated its net loss of $1.1 billion, or $4.45 per diluted share, versus a restated net loss of $422 million, or $1.64 per share, for 1998.
Net income for 1998 was reduced by about $566.2 million, while the net income for fiscal 1997 was reduced by about $492.1 million.
In a conference call with analysts Tuesday, the company said it had met with vendors, sold off outdated merchandise and boosted marketing to become more competitive. That has resulted in improvements in same-store sales this year on both the East Coast and the West Coast, said Mary Sammons, president and chief operating officer.