International Paper 2015 Annual Report Download - page 45

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Looking ahead to 2016, compared with the fourth
quarter of 2015 sales volumes in the first quarter are
expected to decrease due to seasonally weaker
customer demand for uncoated freesheet paper.
Average sales price improvements are expected to
reflect the partial realization of announced sales price
increases in the Brazilian domestic market for uncoated
freesheet paper. Input costs are expected to be slightly
higher for chemicals and electricity.
European Papers net sales in 2015 were $1.2 billion
compared with $1.5 billion in 2014 and $1.5 billion in
2013. Operating profits in 2015 were $133 million
compared with $140 million in 2014 and $167 million in
2013.
Compared with 2014, sales volumes for uncoated
freesheet paper in 2015 were slightly lower in both
Russia and Europe. Average sales price realizations
for uncoated freesheet paper increased in Russia, but
remained flat in Europe, reflecting tight demand and
supply conditions in the first half of the year. Input costs
increased slightly as higher costs for wood, chemicals
and energy in Russia were largely offset by lower costs
in Europe. Planned maintenance downtime costs were
$11 million higher in 2015 than in 2014.
Entering 2016, domestic sales volumes in the first
quarter are expected to be seasonally weaker in Russia,
and stable in Europe. Average sales price realizations
for uncoated freesheet paper are expected to reflect the
impact of announced price increases in both Europe
and Russia. Input costs should be slightly higher for
wood and chemicals. Planned maintenance downtime
costs should be $1 million lower than in the fourth
quarter of 2015.
Indian Papers net sales were $172 million in 2015, $178
million in 2014 and $185 million ($174 million excluding
excise duties which were included in net sales in 2013
and prior periods) in 2013. Operating profits were a loss
of $11 million in 2015, compared with a gain of $8 million
(a loss of $12 million excluding a gain related to the
resolution of a legal contingency) in 2014 and a loss of
$145 million (a loss of $22 million excluding goodwill
and trade name impairment charges) in 2013.
Average sales price realizations decreased in 2015
compared with 2014 reflecting soft market demand.
Sales volumes increased, primarily to export markets.
Input costs were lower for wood and chemicals.
Operating costs were higher in 2015, but planned
maintenance downtime costs were even with 2014.
Looking ahead to the first quarter of 2016, sales
volumes are expected to be seasonally higher. Average
sales price realizations are expected to be stable.
U.S. Pulp net sales were $844 million in 2015 compared
with $895 million in 2014 and $815 million in 2013.
Operating profits were $46 million in 2015 compared
with $57 million in 2014 and $2 million in 2013.
Sales volumes in 2015 decreased from 2014 with lower
softwood pulp volumes being partially offset by higher
fluff pulp volumes. Average sales price realizations
were lower for both fluff pulp and softwood market pulp.
Input costs decreased primarily for energy. Operating
costs were higher, but distribution costs were lower.
Planned maintenance downtime costs were $4 million
lower in 2015 than in 2014.
Compared with the fourth quarter of 2015, sales
volumes in the first quarter of 2016 are expected to be
stable. Average sales price realizations are expected
to be lower for fluff pulp and softwood market pulp. Input
costs should be higher for fuels and utilities. Planned
maintenance downtime costs should be about $45
million higher than in the fourth quarter of 2015 including
outage costs associated with the conversion of our
Riegelwood mill to 100% pulp production.
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 2015 decreased 14%
from 2014, and decreased 14% from 2013. Operating
profits decreased 114% from 2014 and decreased
116% from 2013. Excluding the cost associated with
the conversion of our Riegelwood, North Carolina mill
to 100% pulp production, net of the proceeds from the
sale of the Carolina Coated Bristols brand, costs
associated with the impairment of goodwill and other
assets of the IP-Sun JV, costs associated with the
permanent shutdown of a paper machine at our
Augusta, Georgia mill and other special items, 2015
operating profits were 15% lower than in 2014, and 24%
lower than in 2013. Benefits from higher sales volumes
($14 million), lower planned maintenance downtime
costs ($5 million) and lower input costs ($39 million)
were offset by lower average sales price realizations
and mix ($30 million), higher operating costs ($44
million), and higher foreign exchange and other costs
($11 million). In addition, operating profits in 2015
include a charge of $174 million for the impairment of
goodwill and other assets for the IP-Sun JV, an $8
million cost related to the conversion of our Riegelwood
mill to 100% pulp production, net of the proceeds from
the sale of the Carolina Coated Bristols brand, and $2
million of costs associated with sheet plant closures,
while operating profits in 2014 include $8 million of costs
associated with sheet plant closures. Operating profits
in 2013 include costs of $45 million related to the
permanent shutdown of a paper machine at our