Int'l Paper CFO sees flat demand

By Ernest Scheyder

NEW YORK (Reuters) - Paper and packaging producer International Paper Co (IP.N) said demand for its products has stagnated, and it sees no immediate signs of the U.S. economy improving.

"I don't think we've seen anything that could be called a trend other than the flat market," Chief Financial Officer Timothy Nicholls told the Reuters Paper and Packaging Summit on Tuesday.

Although North America has been a weak market for the company, China, Russia and Brazil appear to be coming back quicker from the recession that hit the global economy last year, he said.

For example, IP expects to double its shipments within the Chinese domestic market this year compared with last, he said.

Like many other parts of the economy, the paper and packaging industry has been plagued by waning customer demand during the recession.

To be competitive and counteract overcapacity, many of the sector's big players have had to cut prices, which has further harmed results.

IP has been helped by relatively low inventories among its customers, Nicholls said. That means its customers generally need to buy more of its products to keep stockpiles refreshed.

Additionally, IP should benefit from an improving economy, as many of its products are used in everyday settings like restaurants, he said.

"As long as people make things and put them in containers" there will be demand for IP's products, said Nicholls, who has been the company's CFO for the past two years.

IP had $12.7 billion in debt at the beginning of the year, and has been able to cut that to $10.3 billion so far, said Nicholls, speaking from IP's headquarters in Memphis, Tennessee.

IP hopes to cut an additional $800 million in debt by the end of the year, he said.

About $20 million in debt comes dues at the end of the year, though $325 million is due in 2010, $75 million due in 2011 and $570 million due in 2012, according to the company's latest quarterly earnings report.

Shares of International Paper closed Tuesday up 2.8 percent at $21.47 on the New York Stock Exchange.

(Additional reporting by Steve James and Euan Rocha; Editing by Tim Dobbyn and Matthew Lewis)