International Paper Profit Slips on Material Costs
International Paper posted lower first-quarter earnings on Wednesday and also fell short of Wall Street expectations as price increases failed to offset higher raw material costs.
The Memphis, Tenn.-based company's results were also hurt as its uncoated paper shipment volumes fell 7 percent in North America and 1 percent in Europe.
CEO John Faraci told CNBC the share decline reflects investor concern about a slowing U.S. economy. Company shares were off 2.4 percent in premarket trading.
"The first quarter was a tough quarter,"Faraci said. "Our input costs on, energy, wood, chemicals, freight, were up three times as much as our pricing...Having said that, it was the second best first quarter in eight years."
"If the economy is as weak as everybody is talking about, and I think it is, our results are holding up."
Net income for International Paper dropped to $133 million, or 31 cents a share, from $434 million, or 97 cents a share, a year earlier.
Earnings from continuing operations, excluding one-time items, fell to 41 cents a share from 45 cents. Wall Street was anticipating 51 cents a share, according to Reuters Estimates.
Net sales rose 8.6 percent to $5.67 billion. Analysts, on average, had forecast $5.60 billion.
"We continued to realize price improvement in the first quarter. However, those gains were more than offset by sharply increasing input costs," Faraci said in a separate statement.
The company's shares have fallen over 15 percent during the last three months and closed at $27.31 on Tuesday on the New York Stock Exchange.
-- Reuters contributed to this report.