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First QuarterFirst QuarterJohn V Faraci First Quarter2009 ReviewFirst Quarter2009 Review
John V. FaraciChairman & Chief Executive Officer
April 30, 2009April 30, 2009Tim S. NichollsTim S. Nicholls
Senior Vice President & Chief Financial Officer
Forward-Looking StatementsForward-Looking Statements
These slides and statements made during this presentation contain forward-lookingstatements. These statements reflect management's current views and are subject to risksand uncertainties that could cause actual results to differ materially from those expressedand uncertainties that could cause actual results to differ materially from those expressedor implied in these statements. Factors which could cause actual results to differ relate to:(i) increases in interest rates and our ability to meet our debt service obligations; (ii)industry conditions, including but not limited to changes in the cost or availability of rawmaterials energy and transportation costs competition we face cyclicality and changes inmaterials, energy and transportation costs, competition we face, cyclicality and changes inconsumer preferences, demand and pricing for its products; (iii) global economic conditionsand political changes, including but not limited to the impairment of financial institutions,changes in currency exchange rates, credit availability, credit ratings issued by recognized
dit ti i ti th t f f t i f di bli ti dcredit rating organizations, the amount of our future pension funding obligation andpension and health care costs; (iv) unanticipated expenditures related to the cost ofcompliance with environmental and other governmental regulations and to actual orpotential litigation; and (v) whether we experience a material disruption at one of ourmanufacturing facilities and risks inherent in conducting business through a joint venture.We undertake no obligation to publicly update any forward-looking statements, whether asa result of new information, future events or otherwise. These and other factors that couldcause or contribute to actual results differing materially from such forward looking
2
g y gstatements are discussed in greater detail in the company's Securities and ExchangeCommission filings.
Statements Relating to Non-GAAP Financial MeasuresStatements Relating to Non-GAAP Financial Measures
During the course of this presentation, certain U S GAAP fi i l i f ti ill bnon-U.S. GAAP financial information will be
presented.A ili ti f th b t U SA reconciliation of those numbers to U.S. GAAP financial measures is available on the company’s website at internationalpaper.comcompany s website at internationalpaper.comunder Investors.
3
First Quarter 2009 Results SummarySolid Results Despite Weak EconomyFirst Quarter 2009 Results SummarySolid Results Despite Weak Economy
Solid Results $0.41
Input Cost Relief
E ll O i
$0.04
Excellent Operations
Integration Synergies $0.21
$0.37 $0.07
Reduced Overhead Expenses
St F C h Fl$0.14
$0 08Strong Free Cash Flow
Debt Refinancing & Reduction
$0.08
1Q08 4Q08 1Q09
O ti B i EPS
4Earnings from continuing operations before special items
Operating Business EPSForest Products EPS
1Q09 Financial Snapshot1Q09 Financial Snapshot
$ Billion 1Q08 4Q08 1Q09
Sales $5.7 $6.5 $5.7Sales $5.7 $6.5 $5.7
EBITDA $0.6 $0.7 $0.6
Free Cash Flow1 $0.2 $0.4 $0.7
Cash Balance $0.9 $1.1 $1.0
5Earnings from continuing operations before special items; 4Q08 & 1Q09 includes CBPR1 Cash provided by continuing operations less capital expenditures
Industrial Packaging Integration ProgressOn Track Despite Economic RecessionIndustrial Packaging Integration ProgressOn Track Despite Economic Recession
1 70 3$2.0
1.3
1.7
0.1
0.3
$1.5
$1.0
Bill
ion
$0.5
B
$0.0 1Q09 EBITDA Incremental Volume / Margin Original 3-Year
6
1Q09 EBITDA Annualized
Incremental Synergies
Volume / Margin Improvements
Original 3 Year Target
1Q09 vs. 4Q08 EPSWeak Volume , Input Cost Relief & Strong Operations1Q09 vs. 4Q08 EPSWeak Volume , Input Cost Relief & Strong Operations
$0.50
$ / Share$ / Share
.11 (.22)
$0.40
.23
( 04)
$0.30
.48Forest Products Earnings
.21
.04(.04)
(.04)(.06)
(.02) (.06)$0.20
.07
.08$0.10
.14
7
$0.004Q08 Price Input Costs Cost & Mix Volume / LOO Corporate &
OtherVicksburg Ins. Recov.
Interest Tax Ilim JV 1Q09
Earnings from continuing operations before special items
Global Input & Freight Costs by Segment $124MM, or $0.23/Share Favorable vs. 4Q08Global Input & Freight Costs by Segment $124MM, or $0.23/Share Favorable vs. 4Q08
81$90
$60
$75
n
$45
$60
Mill
ion
2023
$15
$30
$0 Consumer Packaging
Industrial Packaging
Printing Papers
8
Fiber Energy Chemicals Freight OCC
PackagingPackaging Papers
Input costs for continuing businesses
Lack of Order Downtime1.1 Million Tons in 1Q09Lack of Order Downtime1.1 Million Tons in 1Q09
702 729800(Thousand Tons)
1074
1 050
1,100
702
500
600
700998
1,000
1,050
300
400
500 950IP Total
127 120
14 35
152
48127
18100
200
300
14 35 180
Containerboard Uncoated Papers
NA Pulp Coated Paperboard
European Papers
9
4Q08 1Q09None of the businesses recorded LOO downtime in 1Q08.1Q09 LOO downtime excludes capacity from mills or machines that have been permanently or indefinitely shut down: Valliant #3 (97,000 tons), Franklin #3 (32,000 tons) and Louisiana mill (120,000 tons)
Industrial Packaging Earnings 1Q09 vs. 4Q08Industrial Packaging Earnings 1Q09 vs. 4Q08
1888141(32)
(3)$200 11Vicksburg Insurance 81 (32)
$150 145
Insurance Settlement
(11)33
$100Mill
ion
Mill
ion
112$50
$0
$
10
$04Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09
1 Excludes trade volume Earnings before special items
Industrial Packaging SynergiesAchieved Three-Year Run Rate after 8 MonthsIndustrial Packaging SynergiesAchieved Three-Year Run Rate after 8 Months
$405 MM$405 MM $400 MM$400 MM
$220 MM$220 MM
$96 MM$96 MM
$220 MM$220 MM
$96 MM$96 MM
1Q09 Original 2009 Target
March Run Rate Annualized
Original 3-Yr Target
11
Box Plants Mix Mills Overhead
Industrial Packaging Merger BenefitsAchieving Higher Savings at a Faster RateIndustrial Packaging Merger BenefitsAchieving Higher Savings at a Faster Rate
Total IPG # of Box Commercial I t
Total S iTotal IPG
Employees# of Box Plants Improvements
per CBPR TonSynergies
$MM
Base 23,700 120 -- --
Pl d 21 900 109 +$23 $400Planned 21,900 109 +$23 $400
Current Run Rate 20 700 108 +$19 $405Current Run Rate 20,700 108 +$19 $405
New 2010 Target 20,100 <108 +$23 $500*
12
g , $ $
* Excludes $80 million of procurement savings
Industrial Packaging Relative PerformanceOutperforming Competitors in 1Q09Industrial Packaging Relative PerformanceOutperforming Competitors in 1Q09
17.4%17.5% 17.2%18%20%
12.8%
16.2%
14.3%13.0%
17.2%15.3%
14%16%18%
9.1%
8%10%12%
4%6%8%
0%2%
IP Competitor A Competitor B
13IP EBITDA margins based on North American Industrial Packaging operating profit before special itemsCompetitor EBITDA margins obtained from public filings and IP analysis
IP Competitor A Competitor B1Q08 4Q08 1Q09
Printing Papers Earnings 1Q09 vs. 4Q08Printing Papers Earnings 1Q09 vs. 4Q08
11318
22(27)(17)
(8)
$125
10118 (17)$100
$75
Mill
ion
Mill
ion
$50
$0
$25
14
$04Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09
Earnings Before Special Items
Consumer Packaging Earnings 1Q09 vs. 4Q08Consumer Packaging Earnings 1Q09 vs. 4Q08
17 (48)$60
$70
17 (48)
$50
$60
26$40
Mill
ion
Mill
ion
22
13
13$20
$30
1
13
$10
15
1$0
4Q08 Price Input Costs Cost & Mix Volume & LOO Asian Inventory Adjustment
1Q09
Earnings Before Special Items
xpedxxpedx
$ Million 1Q08 4Q08 1Q09
Sales $1,985 $1,940 $1,590
E i $16 $26 ($7)Earnings $16 $26 ($7)
Weak paper and packaging demandWeak paper and packaging demand
Declining prices & gross margin dollars for coated freesheet & coated groundwood (>60% of total g (paper sales)
Reduced headcount by 4%, or 270 positions
16
Solid free cash flow
Forest ProductsForest Products
1Q08 4Q08 1Q09
Sales ($ Million) $25 $65 $5
Earnings ($ Million) $25 $38 $2
Acres Sold 13,000 30,000 2,000
Price / Acre $1,871 $2,106 $2,108$ , $ , $ ,
Pending sale of 143,000 acres now expected to close in3Q09. When that transaction closes, remaining NPV of land
17
gportfolio will be $60 - $80 million
Ilim Joint Venture1Q09Ilim Joint Venture1Q09
$ Million 1Q08 4Q08 1Q09
Sales (100%) $530 $530 $395
Earnings (IP Share) $17 $0 ($26)g ( ) ( )
1Q09 vs. 4Q08 1Q09 vs. 1Q08
Business Volume(000 Metric
Tons)
Price / Ton
Volume (000 Metric
Tons)
Price / Ton
Pulp (9%) ($139) (12%) ($103)Pulp (9%) ($139) (12%) ($103)
Containerboard 2% ($58) 3% ($5)
18
Ilim’s results are reported on a one-quarter lagIP’s shares of Ilim’s 1Q08, 4Q08 & 1Q09 earnings include $4 million, $11 million and $15 million of after-tax foreign exchange losses, respectively
Free Cash FlowFree Cash Flow
($ Million) 1Q08 4Q08 1Q09
Cash from Operations $434 $713 $649
Alternative Fuel Mixture Tax Credits - - $145
Cash Provided by Continuing Operations $434 $713 $794
Less Capital Investment ($215) ($270) ($128)
19
Free Cash Flow $219 $443 $666
Debt Reduction Progress$1.6 Billion in 9 MonthsDebt Reduction Progress$1.6 Billion in 9 Months
$14 Billion
12.70.6
0.6$12
$13
11.10.4
$11
$12
$9
$10
$8
$9
August 2008 2H08 1Q09 April April 30th
20
gPro Forma
with Acquisition
Q p pBalance
Cash & Committed Facilities$3.5 BillionCash & Committed Facilities$3.5 Billion
$ Billion Maturity Facility Cost
Quarter-End Cash - $1 0 -Quarter-End Cash - $1.0 -
$1.0B1 Accounts Receivables Program JAN 2010 Zero Drawn CP Rate2 + 150 bps
$1.5B Corporate Revolver MAR 2011 Zero Drawn LIBOR + 50 to 60 bps
Total Cash & Committed Facilities $3 5 -Total Cash & Committed Facilities $3.5
21
Cost includes commitment fees1 $871 million available at quarter-end based on eligible receivable balances2 Conduit’s rate
Debt Maturities by Quarter2009 - 2011Debt Maturities by Quarter2009 - 2011
$1,200
$800
$1,000
$400
$600
$200
$400
$ 0
$680 $550
$0
2009 2010 2011Q1 Q2 Q3 Q4 Monetization & Other
$50
22
Q1 Q2 Q3 Q4 Monetization & Other
U.S. debt as of April 30; foreign debt as of March 31Monetization & Other: Intend to rollover or refinance timber monetization debt, Sun JV debt and other foreign subsidiary debt
Pension Funding UpdateNo Cash Contributions Expected in 2009/10Pension Funding UpdateNo Cash Contributions Expected in 2009/10
December 2008 Legislation Funding Requirements94% of liability for 2009– 94% of liability for 2009
– 96% of liability for 2010– 100% of liability beyond 2010
All t thi hi h d f i t t l– Allows asset smoothing which defers investment loss
March 2009 Regulatory ReliefProvided relief in yield curve determination– Provided relief in yield curve determination
– Select discount rate between August 2008 – December 2008– Estimated 10 - 20% reduction in 2009 liability
Impact of Relief– IP credit balance likely to satisfy any 2009/10 funding requirements
N i d h t ib ti lik l til 2011
23
– No required cash contributions likely until 2011
Alternative Fuel Mixture Tax CreditsAlternative Fuel Mixture Tax Credits
IP generates >70% of integrated mill energy needs from renewable bio-fuelsrenewable bio fuels
Transforming pulping waste into bio-energy is environmentally b fi i lbeneficial
IP is not burning additional fossil fuel to qualify for these credits
Black liquor energy is sustainable & merits tax treatment similarBlack liquor energy is sustainable & merits tax treatment similar to other renewable energy sources
24
Alternative Fuel Mixture Tax Credits$558 Million Pre-Tax in 4Q08 & 1Q09Alternative Fuel Mixture Tax Credits$558 Million Pre-Tax in 4Q08 & 1Q09
Tax Credit Claims $ Millions
$Received in 1Q09 $145
A d i 1Q09 $413Accrued in 1Q09 $413
Total Credits 4Q08 1Q09 $558*Total Credits 4Q08 – 1Q09 $558*
25* Before $18 million of associated expenses and $210 million of taxes
First Quarter SummarySolid Results Despite RecessionFirst Quarter SummarySolid Results Despite Recession
Solid Results in Challenging Environment
1.1MM tons of Lack of Order Downtime
Excellent OperationsExcellent Operations
$96 Million in Integration Synergies
$30 Million in Overhead Expense Reduction
$124 Million Input Cost Relief$124 Million Input Cost Relief
$666 Million Free Cash Flow
26
$600 Million Debt Reduction
Second Quarter OutlookSecond Quarter Outlook
Challenging Economic EnvironmentChallenging Economic Environment
M j V i bl V l D ti & P i iMajor Variables - Volume, Downtime, & Pricing
Increased Maintenance Outages
Lower Ilim Equity Earnings
27
PrioritiesPriorities
Aggressively Manage Costgg y g
Match Supply to Customers’ Needs
Strengthen Balance Sheet
28
Questions & AnswersQuestions & Answers
I t R l ti C t tInvestor Relations ContactsThomas A. Cleves 901-419-7566
Emily Nix 901-419-4987
Media ContactKathleen Bark 901 419 4333Kathleen Bark 901-419-4333
29
Appendixpp
30
Special Items Net of Taxes1Q09Special Items Net of Taxes1Q09
$ Million EPS
Earnings from Continuing Operations & Before Special Items $34 $0.08
S i l It N t f TSpecial Items Net of Taxes:Alternative Fuel Mixture Credits $330Facilities Closure Costs ($33)Facilities Closure Costs ($33) Overhead Reduction Initiative ($32) Integration Costs ($22)Integration Costs ($22) Tax Adjustments ($20)
Total Special Items Net of Taxes $223 $0 53
31
Total Special Items Net of Taxes $223 $0.53Net Earnings $257 $0.61
Key Financial Statistics Key Financial Statistics
$ Billion 20071 2008 2009 EstimateEstimate
Capital Spending $1.3 $1.0 $0.6
Depreciation & Amortization $1.1 $1.3 $1.53
Net Interest Expense $0.3 $0.5 $0.7
Corporate Items2 $0 2 $0 1 $0 25Corporate Items2 $0.2 $0.1 $0.25
Effective Tax Rate2 30% 31.5% 32% - 34%
32
1 Excludes discontinued operations 2 Before special items and excluding Ilim3 Estimated depreciation impacted by extensive lack-of-order downtime
Maintenance Outages Expenses$58 Million Seasonal IncreaseMaintenance Outages Expenses$58 Million Seasonal Increase
$ Millions 1Q09 2Q09E 3Q09E 4Q09E
North America 19 38 39 28
Europe 7 19 13 0Europe 7 19 13 0
Brazil 5 0 3 0
Printing Papers Total $31 $57 $55 $28Printing Papers Total $31 $57 $55 $28
Industrial Packaging $44 $58 $6 $43
Consumer Packaging $4 $22 $11 $9
Total Impact $79 $137 $72 $80
33Dollar impact of planned maintenance outages are estimates and subject to changeIncludes CBPR outages
Business Segment Price RealizationBusiness Segment Price Realization
Average Selling Price RealizationsAverage Selling Price Realizations
Industrial Packaging ($/ton) 1Q08 4Q08 1Q09
Containerboard $545E $584 $551
Corrugated Boxes $785E $836 $846
Printing Papers ($/ton) 1Q08 4Q08 1Q09
Uncoated Freesheet $950 $1,005 $996U coated ees eet $950 $ ,005 $996
Pulp $646 $577 $538
34
Average IP U.S. selling price realizations (includes the impact of mix across all grades)Industrial Packaging price realizations include CBPR
Industrial PackagingIndustrial Packaging
1Q09 vs 4Q08 1Q09 vs 1Q081Q09 vs. 4Q08 1Q09 vs. 1Q08
Business Volume Price / Ton Volume Price /
Ton
N.A. Containerboard (23%) ($32) (49%)E $8E
N A Container (5%) $10 (17%)E $61EN.A. Container (5%) $10 (17%)E $61E
European Container (3%) (€21) (9%) (€26)
35Average IP price realization (includes the impact of mix across all grades)Includes CBPR
Printing PapersPrinting Papers
1Q09 4Q08 1Q09 1Q081Q09 vs. 4Q08 1Q09 vs. 1Q08
Business Volume Price / Ton Volume Price / Ton
N.A. Paper (7%) ($10) (24%) $46
N.A. Pulp (21%) ($39) (9%) ($108)
European Paper 3% (€56) (1%) (€72)European Paper 3% (€56) (1%) (€72)
Brazilian Paper (16%) ($39) (15%) $19
36Average IP price realization (includes the impact of mix across all grades)
Consumer PackagingConsumer Packaging
1Q09 4Q08 1Q09 1Q081Q09 vs. 4Q08 1Q09 vs. 1Q08
Volume Price/Ton Volume Price/Ton
U.S. Coated Paperboard (25%) $38 (28%) $107
Revenue Price Revenue Price
Converting Businesses (10%) NA (3%) NAConverting Businesses (10%) NA (3%) NA
37Average IP price realization (includes the impact of mix across all grades)
Special ItemsSpecial Items
Special Items Pre-Tax: 1Q08 4Q08 1Q09
Printing Alternative Fuel Mixture Credits $240Printing Papers
Alternative Fuel Mixture Credits $240
Facility Closure Costs ($153) ($29)
Alternative Fuel Mixture Credits $208Industrial Packaging Integration Costs ($26) ($36)
Facility Closure Costs ($8)
Consumer Packaging
Alternative Fuel Mixture Credits $92
Reorganization ($5) ($4) ($2)
CorporateRestructuring & Other Charges ($36) ($53) ($52)
Impairments of Goodwill ($1,777)
38
Total Special Items Pre-Tax ($41) ($2,021) $421
Debt CovenantsDebt Covenants
Covenant 1Q09Covenant 1Q09
Maximum Debt-to-Total Capital 60% 50.3%
Minimum Consolidated Net Worth $9B $11.4B
39
1Q09 EBITDAfrom Continuing Operations before Special Items1Q09 EBITDAfrom Continuing Operations before Special Items
Operating Profit
$ MillionsD & A
$ MillionsTons(000)
EBITDA per Ton$ Millions
Industrial Packaging
North American $175 $156 2,863 $116
European $13 $8 270 $78
Printing Papers
North American $84 $51 706 $191North American $84 $51 706 $191
European $25 $22 370 $127
Brazilian $20 $24 180 $244
U.S. Market Pulp ($28) $6 317 ($69)
Consumer Packaging
40
U.S. Coated Paperboard $6 $28 290 $117
Total $295 $295 4,996 $118
Operating Profits by Industry Segmentfrom Continuing Operations before Special ItemsOperating Profits by Industry Segmentfrom Continuing Operations before Special Items
$ Million 1Q08 4Q08 1Q09Industrial Packaging $97 $145 $188Printing Papers $185 $113 $101Consumer Packaging $14 $1 $22Distribution $16 $26 ($7)Distribution $16 $26 ($7)Forest Products $25 $38 $2Operating Profit $337 $323 $306Net Interest E pense ($81) ($186) ($164)Net Interest Expense ($81) ($186) ($164)Noncontrolling Interest / Equity Earnings Adjustment $4 ($13) $6
Corporate Items ($21) ($21) ($51)p ($ ) ($ ) ($ )Special Items ($41) ($2,021) $421Earnings (Loss) from continuing operations before income taxes, equity earnings & minority interest $198 ($1,918) $518
41
Equity Earnings, net of taxes - Ilim $17 $0 ($26)
Geographic Business Segment Operating Resultsfrom Continuing Operations before Special ItemsGeographic Business Segment Operating Resultsfrom Continuing Operations before Special Items
$ MillionSales Operating Profit
1Q08 4Q08 1Q09 1Q08 4Q08 1Q09
Industrial PackagingNorth American $1,050 $2,125 $1,885 $79 $130 $175European $315 $255 $240 $18 $15 $13Asian $80 $75 $55 $0 $0 $0
Printing PapersNorth American $885 $765 $705 $106 $73 $84European $435 $350 $325 $42 $36 $25Brazilian $225 $215 $170 $33 $44 $20U.S. Market Pulp $165 $170 $125 $4 ($39) ($28)A i $5 $5 $0 $0 ($1) $0Asian $5 $5 $0 $0 ($1) $0
Consumer PackagingNorth American $600 $635 $530 $2 $16 $4European $75 $70 $70 $9 $5 $14
42
European $75 $70 $70 $9 $5 $14Asian $95 $95 $115 $3 ($20) $4
Distribution $1,985 $1,940 $1,590 $16 $26 ($7)Excludes Forest Products
2009 Earnings from Continuing Operations2009 Earnings from Continuing Operations
Pre-Tax$MM
Tax$MM
Minority Interest
$MMEquity
EarningsNet
Income$MM
Estimated Tax Rate
Average Shares1
MMDiluted EPS2
$MM $MM MM
Before Special Items
1Q09 $97 ($32) ($4) ($27) $34 32% 423 $0 081Q09 $97 ($32) ($4) ($27) $34 32% 423 $0.08
Special Items
Q $ ($ ) $ $ $ % $1Q09 $421 ($198) $0 $0 $223 47% 423 $0.53
Earnings from Continuing Operations
1Q09 $518 ($230) ($4) ($27) $257 44% 423 $0.61
43
1 Assuming dilution 2 A reconciliation to GAAP EPS is available at www.internationalpaper.com under the Investors tab at presentations
Total Cash Cost Components 1Q09Total Cash Cost Components 1Q09
Fiber28%Overhead 28%
9%
Energy12%
Materials14%Freight
12%
Labor
12%
44North American Mills Only
Labor13%Chemicals
13%
Global Input & Freight Costs by Input $124MM, or $0.23/Share Positive Impact vs. 4Q08Global Input & Freight Costs by Input $124MM, or $0.23/Share Positive Impact vs. 4Q08
44$50 Outside North America North America
31
44
28$30
21$30
Mill
ion
$10
M
($10)Fiber Chemicals Energy Freight
45
Fiber Chemicals Energy Freight
Input costs for continuing businesses
Global Input & Freight Costs by Input $28MM, or $0.05/Share Negative Impact vs. 1Q08Global Input & Freight Costs by Input $28MM, or $0.05/Share Negative Impact vs. 1Q08
$20 Outside North America North America
8
$0
(1)
$0
Mill
ion
(23)(12)
( )($20)
M
($40)Chemicals Fiber Energy Freight
46
Chemicals Fiber Energy Freight
Input costs for continuing businesses; does not include CBPR
1Q09 vs. 1Q08 EPS1Q09 vs. 1Q08 EPS
28 ( 33)
$0.80$ / Share$ / Share
.28 (.33)
$0.60
$0.70Forest
Products Earnings
.41.09 (.05)
(.05)$0.40
$0.50.48
.04 ( )(.13)
(.10)$0 20
$0.30
37
.08
( )
$0.10
$0.20 .37
47
$0.001Q08 Price Input Costs Cost & Mix Volume & LOO Corporate &
OtherInterest Ilim JV 1Q09
Earnings from continuing operations before special items; volume includes earnings from CBPR
Industrial Packaging Earnings 1Q09 vs. 1Q08Industrial Packaging Earnings 1Q09 vs. 1Q08
18882 2$200
$150
97
22 (1) (14)
$100illio
nill
ion
11
MM
$50
48
$01Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09
1 Excludes trade volume and includes CBPR earningsEarnings Before Special Items
Printing Papers Earnings 1Q09 vs. 1Q08Printing Papers Earnings 1Q09 vs. 1Q08
185 (8)(31)
$175
$200
(100)$150
10158 (3)$100
$125
Mill
ion
Mill
ion
$50
$75
$25
$
49
$01Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09
Earnings Before Special Items
Consumer Packaging Earnings 1Q09 vs. 1Q08Consumer Packaging Earnings 1Q09 vs. 1Q08
393 (47)$60
$40
$50
$30
$40
Mill
ion
Mill
ion
14
2212 1$20
$10
50
$01Q08 Price Input Costs Volume & LOO Cost / Mix Other 1Q09
Earnings Before Special Items
Natural Gas Costs28% Decrease vs. 4Q08 Average CostNatural Gas Costs28% Decrease vs. 4Q08 Average Cost
250Index: Jan 2005 Natural Gas Costs = 100
200
150
100
50
2005 2006 2007 2008 2009
51
0Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
NYMEX Natural Gas closing prices
U.S. Fuel Oil17% Decrease vs. 4Q08 Average CostU.S. Fuel Oil17% Decrease vs. 4Q08 Average Cost
220
Index: Jan 2006 Fuel Oil Costs = 100
180
200
140
160
100
120
60
80
2006 2007 2008 2009
52
40Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
Delivered cost to U.S. facilities
U.S. Mill Wood Costs9% Decrease vs. 4Q08 Average CostU.S. Mill Wood Costs9% Decrease vs. 4Q08 Average Cost
125Index: Jan 2005 Wood Costs = 100
115
120
110
100
105
952005 2006 2007 20092008
53
90Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
Delivered cost to U.S. facilities
U.S. Chemical Composite Index7% Decrease vs. 4Q08 Average Cost U.S. Chemical Composite Index7% Decrease vs. 4Q08 Average Cost
250Index: Q1’05 Chemical Composite= 100
200
225
150
175
100
125
75
100
2005 2006 2007 20092008
54
50Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan
Delivered cost to U.S. facilities; includes Caustic Soda, Sodium Chlorate, Starch and Sulfuric Acid2005 - 2008 excludes CBPR
Global ConsumptionAnnual Purchase Estimates for Key InputsGlobal ConsumptionAnnual Purchase Estimates for Key Inputs
Commodity U. S. Non – U. S.
G ( ) 50 500 000 16 000 000
Energy
Natural Gas (MM BTUs) 50,500,000 16,000,000
Fuel Oil (Barrels) 2,100,000 500,000
Coal (Tons) 1 100 000 230 000Coal (Tons) 1,100,000 230,000
FiberWood (Tons) 50,000,000 8,400,000
Old Corrugated Containers (Tons) 3,500,000 310,000Old Corrugated Containers (Tons) 3,500,000 310,000
Caustic Soda (Tons) 330,000 60,000
Starch (Tons) 490,000 110,000
Chemicals Sodium Chlorate (Tons) 225,000 50,000
LD Polyethylene (Tons) 50,000 -
55Does not include Asian or Ilim consumption; excludes consumption by permanent & indefinite machine shutdownsEstimates are based on normal operations and may be impacted by downtime
Latex (Tons) 25,000 4,000
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