International Paper plans box plant closures
NEW YORK (Reuters) - International Paper Co (IP.N), the largest North American paper and containerboard maker, expects to make an announcement in coming months about box plant closures, Chief Financial Officer Tim Nicholls said on Thursday.
"I think we will be in a position later this year to start talking about where some of the box plant rationalizations might take place," Nicholls told the Reuters Paper Summit.
The first phase of reductions is likely to target removing 10 to 13 box plants from its manufacturing base, but all 10 to 13 closures are not likely to be announced at one time, he said.
"I would expect you'd hear something from us soon. It may not be in the third quarter, but probably by year-end we will be talking about this," he said.
Memphis, Tennessee-based International Paper just completed the $6 billion acquisition of Weyerhaeuser Co's (WY.N) packaging assets, a deal that made International Paper the largest North American containerboard maker, ahead of rival Smurfit-Stone Container Corp SSCC.O.
Containerboard is a type of thick paper used to make corrugated boxes. Containerboard is manufactured at mills, which in turn supply box plants which convert containerboard to corrugated boxes.
Nicholls said the integration of the Weyerhaeuser business into the company is going well.
"The good thing was we had the management team in place a month before the deal was closed ... So on day one, folks were ready to hit the ground running," he said.
International Paper and its peers have implemented a $55 per ton price increase in containerboard prices, the companies are at present in the process of implementing a similar increase on box products.
Longbow Research in a recent survey of the industry noted that a majority of respondents believe that the current box price increases will not fully offset the higher costs and expect an additional price increase in 2008.
U.S. box shipments year-to-date are down about 1.8 percent from a year ago, but containerboard inventories remain at historic lows, as a weak U.S. dollar has boosted overseas demand.
Nicholls said he expects the latter half of 2008 to continue to be as volatile as the first-half of the year.
Shares of International Paper closed down 14 cents at $27.46 on Thursday on the New York Stock Exchange.
(Reporting by Euan Rocha; editing by John Wallace and Carol Bishopric)
