International Paper 2014 Annual Report Download - page 64

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special items) compared with $1.8 billion (both including
and excluding costs associated with the integration of
Temple-Inland and other special items) in 2013 and
$1.0 billion ($1.3 billion excluding costs associated with
the acquisition and integration of Temple-Inland and mill
divestiture costs) in 2012.
Sales volumes decreased in 2014 compared with 2013
reflecting slightly softer market demand for boxes.
Average sales price realizations were higher mainly due
to the realization of price increases for boxes and
domestic containerboard that were implemented in
2013. Input costs were significantly higher for wood and
energy. Freight costs also increased. Planned
maintenance downtime costs were $20 million higher
than in 2013. Manufacturing operating costs
decreased, but were offset by inflation and higher
overhead and distribution costs. The business took
about 655,000 tons of total downtime in 2014 of which
240,000 were market-related and 415,000 were
maintenance downtime. In 2013, the business took
about 777,000 tons of total downtime of which about
377,000 were market-related and 400,000 were
maintenance downtime. Operating profits in 2014
included $16 million of costs associated with the
integration of Temple-Inland and a charge of $35 million
associated with a multi-employer pension withdrawal
liability. Operating profits in 2013 included $62 million
of costs associated with the integration of Temple-
Inland.
Looking ahead to 2015, compared with the fourth
quarter of 2014, sales volumes for boxes in the first
quarter are expected to be stable. Input costs are
expected to be similar for wood and recycled fiber, but
lower for mill energy. Planned maintenance downtime
spending is expected to be about $18 million higher with
outages scheduled at the Pine Hill, Savannah,
Pensacola and Vicksburg mills. Manufacturing and
other operating costs are expected to improve.
EMEA Industrial Packaging net sales in 2014 and 2013
include the sales of our packaging operations in Turkey
which are fully consolidated as of the beginning of 2013.
Net sales were $1.3 billion in 2014 compared with $1.3
billion in 2013 and $1.0 billion in 2012. Operating profits
in 2014 were $25 million ($31 million excluding
restructuring costs) compared with $43 million ($32
million excluding a gain on a bargain purchase price
adjustment on the acquisition of a majority share of our
operations in Turkey and restructuring costs) in 2013
and $53 million ($72 million excluding restructuring
costs) in 2012.
Sales volumes in 2014 were higher than in 2013
reflecting recovering economic conditions and
improved demand for industrial packaging. Average
sales margins were higher due to increased sales prices
for boxes, partially offset by higher board costs. Other
input costs, primarily for energy, were lower. Operating
profits included net gains of $2 million and $13 million
in 2014 and 2013, respectively, for insurance
settlements and Italian government grants, partially
offset by additional operating costs in 2013, related to
the earthquakes in Northern Italy in May 2012, which
affected our San Felice box plant.
Entering the first quarter of 2015, sales volumes are
expected to increase slightly reflecting continuing
economic recovery. Average sales margins are
expected to be favorably impacted by lower board
costs, but box prices may decline due to competitive
pressures. Other input costs should be about flat.
Brazilian Industrial Packaging net sales were $349 million
in 2014 compared with $335 million in 2013. Operating
profits in 2014 were a loss of $3 million ($4 million
excluding a net gain related to acquisition and
integration costs) compared with a loss of $2 million (a
net gain of $2 million excluding acquisition and
integration costs) in 2013.
Sales volumes in 2014 decreased compared with 2013
due to overall weaker market demand and lower box
consumption in the product segments of some of our
key customers. Average sales price realizations were
higher reflecting the impact of sales price increases
implemented in the first half of 2014. Input costs were
higher, primarily for recycled fiber and chemicals.
Operating costs were higher.
Looking ahead to the first quarter of 2015, sales
volumes are expected to be stable. Average sales
margins should improve reflecting a more favorable
product mix. Input costs are expected to be stable.
Asian Industrial Packaging net sales were $625 million in
2014 compared with $685 million in 2013 and $660
million in 2012. Operating profits were a loss of $112
million (a loss of $5 million excluding goodwill
impairment charges and restructuring costs) in 2014
compared with a loss of $2 million (a gain of $2 million
excluding restructuring costs) in 2013 and a gain of $5
million in 2012. Operating profits were negatively
impacted in 2014 compared with 2013 by lower average
sales margins and lower sales volumes, partially offset
by decreased operating costs Looking ahead to the
first quarter of 2015, sales volumes and average sales
margins are expected to be seasonally soft.
Printing Papers
Demand for Printing Papers products is closely
correlated with changes in commercial printing and
advertising activity, direct mail volumes and, for
uncoated cut-size products, with changes in white-
collar employment levels that affect the usage of copy
and laser printer paper. Pulp is further affected by
changes in currency rates that can enhance or
disadvantage producers in different geographic