Black liquor tax credit boosts International Paper again

NEW YORK — International Paper Co., the world's biggest wood products firm, said Wednesday its third-quarter profit more than doubled as a federal tax credit more than offset falling sales of cardboard box materials.

The company employs 140 people at a box plant in Bay Minette, 370 people at a paper mill in Yellow Bluff, Ala., and 480 workers and about 100 contractors at its Cantonment, Fla., mill, just north of Pensacola.

The 13 percent sales decline shows retailers who depend on consumer spending have yet to resume large-scale purchases of the cardboard boxes made from materials turned out by IP, which is based in Memphis, Tenn.

But CEO John V. Faraci said that at the end of the latest quarter, the company "began to see some modest improvements in demand in some segments of our paper and packaging businesses."

International Paper's profit rose to $371 million, or 87 cents per share, in the July-September quarter from $149 million, or 35 cents per share, a year ago.

But the latest results included special items, primarily a $525 million federal alternative fuel tax credit, which amounted to $320 million after-tax gain. IP gets the money for mixing diesel fuel with black liquor, a pulp-making byproduct that it already burns to power mills.

Without special items, IP said it would have earned 37 cents per share, down from 84 cents a share a year ago. The result was 13 cents a share better than Wall Street analysts polled by Thomson Reuters expected. They typically exclude special items from estimates.

Sales fell 13 percent to $5.92 billion from $6.81 billion a year ago. The company also generated $1.3 billion in free cash flow and repaid debt by the same amount.

IP said last week that it would close all or part of four mills, laying off 1,600 employees. Faraci said the mill closures would save the company $170 million, and that other mills could increase production to make up for cuts.

(Business Reporter Jeff Amy contributed to this report.)