International Paper swings to quarterly loss on $1 billion impairment charge

International Paper Reports Quarterly Loss Due to $1 Billion Charge

Impact of Impairment Charge on Financial Performance

(Reuters) -International Paper swung to a quarterly loss on Thursday, as the packaging firm recorded a $1 billion charge related to the sale of its cellulose fibers business.

CONTEXT

The Tennessee-headquartered firm recorded the impairment charge related to the sale of its global cellulose fibers business to private equity firm American Industrial Partners for $1.5 billion, announced in August.

Market Reaction to Quarterly Results

The company has also closed underperforming facilities in the UK and Europe and hiked prices.

 MARKET REACTION

Industry Challenges and Trends

Shares in the world's largest packaging firm in terms of revenue were down about 6% in premarket trading. They had lost close to 15% of their value this year as of last close on Wednesday.

WHY IT'S IMPORTANT? 

The paper and packaging industry has been under pressure from both ends, with demand tapering for the last few years as retailers reduce their inventory, and input costs mounting, exacerbated by tariffs imposed by U.S. President Donald Trump.

A weak paper and packaging market in Europe has also weighed on the industry for several quarters, as supply outweighs demand. 

Peer Mondi warned of weak demand and falling prices across pulp and paper grades in early October, sending shares across the industry lower.

Financial Overview and Key Numbers

BY THE NUMBERS

International Paper's third-quarter net sales of $6.22 billion missed market expectations of $6.50 billion, according to data compiled by LSEG.

The company posted a net loss of $1.10 billion, or $2.09 per share, for the quarter ended September 30, compared with a profit of $150 million, or 43 cents per share, a year earlier.

(Reporting by Koyena Das and Prerna Bedi in Bengaluru; Editing by Sahal Muhammed)