International Paper 2015 Annual Report Download - page 43

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Sales volumes decreased in 2015 compared with 2014
reflecting slightly lower box shipments and lower
shipments of containerboard to export markets. In
2015, the business took about 814,000 tons of total
downtime of which about 363,000 were market-related
and 451,000 were maintenance downtime. The
business took about 622,000 tons of total downtime in
2014 of which 240,000 were market-related and
382,000 were maintenance downtime. Average sales
price realizations were lower mostly for Euro-
denominated shipments of containerboard to export
markets. Input costs were lower, primarily for energy.
Distribution costs were flat as lower freight fuel
surcharges offset rate increases. Planned maintenance
downtime costs were $15 million higher than in 2014.
Manufacturing operating costs decreased, but were
more than offset by wage and benefit inflation.
Depreciation costs were lower.
Looking ahead to the first quarter of 2016, compared
with the fourth quarter of 2015, sales volumes for boxes
are expected to be seasonally lower, while shipments
of containerboard to export markets should increase.
Input costs are expected to be higher for energy and
wood, but lower for waste fiber. Planned maintenance
downtime spending is expected to be about $21 million
higher. Manufacturing operating costs are expected to
improve.
EMEA Industrial Packaging net sales were $1.1 billion in
2015 compared with $1.3 billion in 2014 and $1.3 billion
in 2013. Operating profits in 2015 were $13 million
compared with $25 million ($31 million excluding
restructuring costs) in 2014 and $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.
Sales volumes in 2015 were higher than in 2014
reflecting improved market demand and strong
commercial initiatives in the Eurozone throughout the
year and growth in Morocco and Turkey in the fourth
quarter. Net sales decreased primarily due to the
negative impact of foreign exchange rates. Higher
board costs also contributed to lower average sales
margins. Other input costs, primarily for energy, were
lower. Operating earnings in 2015 also included a gain
of $4 million related to the change in ownership of our
OCC collection operations in Turkey.
Entering the first quarter of 2016, compared with the
fourth quarter of 2015 sales volumes are expected to
be flat. Average sales margins are expected to be
favorably impacted by higher box sales prices, lower
board costs in Turkey and a favorable mix. Input costs
for energy should be slightly higher.
Brazilian Industrial Packaging net sales were $228 million
in 2015 compared with $349 million in 2014 and $335
million in 2013. Operating profits in 2015 were a loss
of $163 million (a loss of $26 million excluding goodwill
and trade name impairment charges) compared with a
loss of $3 million (a loss of $4 million excluding a net
gain related to acquisition and integration costs) in 2014
and a loss of $2 million (a gain of $2 million excluding
acquisition and integration costs) in 2013.
Sales volumes in 2015 decreased compared with 2014
due to overall weak economic conditions and lower box
consumption in the product segments of some of our
key customers. Average sales price realizations for
boxes were lower. Input costs were slightly higher.
Operating costs also increased. Planned maintenance
downtime costs were $1 million lower in 2015 compared
with 2014.
Looking ahead to the first quarter of 2016, compared
with the fourth quarter of 2015 sales volumes are
expected to be seasonally lower. Average sales
margins should improve reflecting a previously
announced sales price increase for boxes. Input costs
are expected to be stable and operating costs should
reflect the benefits of cost savings initiatives.
Asian Industrial Packaging net sales were $601 million in
2015 compared with $625 million in 2014 and $685
million in 2013. Operating profits were a loss of $6
million in 2015 compared with a loss of $112 million (a
loss of $5 million excluding goodwill impairment
charges and restructuring costs) in 2014 and a loss of
$2 million (a gain of $2 million excluding restructuring
costs) in 2013. Compared with 2014, sales volumes for
boxes in 2015 were lower and average sales margins
decreased due to competitive price pressures and an
unfavorable sales mix. However, operating costs were
lower.
Looking ahead to the first quarter of 2016, sales
volumes are expected to be seasonally lower. On
October 8, 2015, the Company announced that it was
pursuing strategic options for its corrugated box
business in China and Southeast Asia and had signed
a non-binding letter of intent with a prospective buyer.
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
regions. Principal cost drivers include manufacturing
efficiency, raw material and energy costs and freight
costs.
Printing Papers net sales for 2015 decreased 12% to $5.0
billion compared with $5.7 billion in 2014 and 19%