Secondary issues from trade tensions could impact International Paper: CEO

  • As trade issues linger, International Paper CEO Mark Sutton says secondary impacts could be an issue for the company.
  • The company beat earnings expectations Thursday, but still closed lower.
  • Sutton says China is a good potential customer to his company.
  • "The thing about China and fiber is they need fiber to make their fiber-based products. They don't have it themselves, so depending on what type of product it is, they will need to secure it from somewhere," he says.

A trade war may be underway, but International Paper CEO Mark Sutton told CNBC that he's not worried about it affecting his business.

"So far we haven't had any direct impacts in any kind of retaliatory way," Sutton said Thursday on "Closing Bell." "The biggest issue for us, and companies like us, is the secondary impact."

One example is packaged food.

"If our customers are caught up in a trade war and tariffs, of course they need less packaging, and we end up getting hit," he said.

Sutton's comments come after President Donald Trump reached a general agreement on trade with European Commission President Jean-Claude Juncker after a meeting in Washington on Wednesday.

Treasury Secretary Steven Mnuchin said Thursday on CNBC that the administration also expects an agreement with Canada and Mexico "very soon." Meanwhile, negotiations regarding future trade agreements with China remain uncertain.

"The thing about China and fiber is they need fiber to make their fiber-based products," Sutton said. But, he also pointed out, "They don't have it themselves, so depending on what type of product it is, they will need to secure it from somewhere."

International Paper produces fiber-based packaging, pulp and paper.

An International Paper Co. employee stacks corrugated boxes at the company's factory in Mt. Carmel, Pennsylvania.
Paul Taggart | Bloomberg | Getty Images
An International Paper Co. employee stacks corrugated boxes at the company's factory in Mt. Carmel, Pennsylvania.

International Paper reported second-quarter earnings Thursday that beat expectations. The company posted earnings per share of $1.19 per share compared with Wall Street estimates of about $1.09. That's also up from 66 cents a share a year earlier.

Still, the company's shares closed down 1.9 percent Thursday.

"I don't get overly excited about a single-day reaction," Sutton said. "Our results were strong and our outlook was strong."

"We did turn in a tremendous positive second quarter. It was the best one in a decade and we gave a strong outlook," he said.