International Paper 2014 Annual Report Download - page 66

30
Russia and Europe. Average sales price realizations
for uncoated freesheet paper decreased in both Europe
and Russia, reflecting weak economic conditions and
soft market demand. In Russia, sales prices in rubles
increased, but this improvement is masked by the
impact of the currency depreciation against the U.S.
dollar. Input costs were significantly higher for wood in
both Europe and Russia, partially offset by lower
chemical costs. Planned maintenance downtime costs
were $11 million lower in 2014 than in 2013.
Manufacturing and other operating costs were
favorable.
Entering 2015, sales volumes in the first quarter are
expected to be seasonally weaker in Russia, and about
flat in Europe. Average sales price realizations for
uncoated freesheet paper are expected to remain
steady in Europe, but increase in Russia. Input costs
should be lower for oil and wood, partially offset by
higher chemicals costs.
Indian Papers net sales were $178 million in 2014, $185
million ($174 million excluding excise duties which were
included in net sales in 2013 and prior periods) in 2013
and $185 million ($178 million excluding excise duties)
in 2012. Operating profits were $8 million (a loss of $12
million excluding a gain related to the resolution of a
legal contingency) in 2014, a loss of $145 million (a loss
of $22 million excluding goodwill and trade name
impairment charges) in 2013 and a loss of $16 million
in 2012.
Average sales price realizations improved in 2014
compared with 2013 due to the impact of price
increases implemented in 2013. Sales volumes were
flat, reflecting weak economic conditions. Input costs
were higher, primarily for wood. Operating costs and
planned maintenance downtime costs were lower in
2014. Looking ahead to the first quarter of 2015, sales
volumes are expected to be seasonally higher. Average
sales price realizations are expected to decrease due
to competitive pressures.
Asian Printing Papers net sales were $59 million in 2014,
$90 million in 2013 and $85 million in 2012. Operating
profits were $0 million in 2014 and $1 million in both
2013 and 2012.
U.S. Pulp net sales were $895 million in 2014 compared
with $815 million in 2013 and $725 million in 2012.
Operating profits were $57 million in 2014 compared
with $2 million in 2013 and a loss of $59 million in 2012.
Sales volumes in 2014 increased from 2013 for both
fluff pulp and market pulp reflecting improved market
demand. Average sales price realizations increased
significantly for fluff pulp, while prices for market pulp
were also higher. Input costs for wood and energy were
higher. Operating costs were lower, but planned
maintenance downtime costs were $1 million higher.
Compared with the fourth quarter of 2014, sales
volumes in the first quarter of 2015, are expected to
decrease for market pulp, but be slightly higher for fluff
pulp. Average sales price realizations are expected to
to be stable for fluff pulp and softwood market pulp,
while hardwood market pulp prices are expected to
improve. Input costs should be flat. Planned
maintenance downtime costs should be about $13
million higher than in the fourth quarter of 2014.
Consumer Packaging
Demand and pricing for Consumer Packaging products
correlate closely with consumer spending and general
economic activity. In addition to prices and volumes,
major factors affecting the profitability of Consumer
Packaging are raw material and energy costs, freight
costs, manufacturing efficiency and product mix.
Consumer Packaging net sales in 2014 decreased 1%
from 2013, but increased 7% from 2012. Operating
profits increased 11% from 2013, but decreased 34%
from 2012. Excluding sheet plant closure costs, costs
associated with the permanent shutdown of a paper
machine at our Augusta, Georgia mill and costs related
to the sale of the Shorewood business, 2014 operating
profits were 11% lower than in 2013, and 30% lower
than in 2012. Benefits from higher average sales price
realizations and a favorable mix ($60 million) were
offset by lower sales volumes ($11 million), higher
operating costs ($9 million), higher planned
maintenance downtime costs ($12 million), higher input
costs ($43 million) and higher other costs ($7 million).
In addition, operating profits in 2014 include $8 million
of costs associated with sheet plant closures, while
operating profits in 2013 include costs of $45 million
related to the permanent shutdown of a paper machine
at our Augusta, Georgia mill and $2 million of costs
associated with the sale of the Shorewood business.
Consumer Packaging
In millions 2014 2013 2012
Sales $3,403 $3,435 $3,170
Operating Profit 178 161 268
North American Consumer Packaging net sales were $2.0
billion in 2014 compared with $2.0 billion in 2013 and
$2.0 billion in 2012. Operating profits were $92 million
($100 million excluding sheet plant closure costs) in
2014 compared with $63 million ($110 million excluding
paper machine shutdown costs and costs related to the
sale of the Shorewood business) in 2013 and $165
million ($162 million excluding a gain associated with
the sale of the Shorewood business in 2012).
Coated Paperboard sales volumes in 2014 were lower
than in 2013 reflecting weaker market demand. The
business took about 41,000 tons of market-related
downtime in 2014 compared with about 24,000 tons in
2013. Average sales price realizations increased year-