International Paper 3rd-quarter net income slips

(Recasts, adds details on results, background, analyst comment, CEO comment)

By Euan Rocha

NEW YORK, Nov 2 (Reuters) - International Paper (IP.N), one of the world's largest paper and packaging makers, said on Friday quarterly net profit slipped as gains from land sales fell sharply from a year ago.

Shares of the company declined about 1 percent as the Memphis, Tennessee-based company's outlook fell short of Wall Street's expectations.

"I think the number for the quarter came in as expected, but the issue -- similar to other companies -- is the fourth quarter, where guidance is coming down again," noted Longbow Research analyst Joshua Zaret.

The company expects fourth-quarter earnings to benefit from price increases for its printing paper and corrugated boxes, but cautioned that costs for wood, energy and transportation will continue to weigh.

Third-quarter net income was $217 million, or 51 cents a share, compared with a year-ago profit of $224 million, or 46 cents a share, which included a $185 million gain from the sale of U.S. forest lands.

Excluding items, the company earned 57 cents a share, in-line with Wall Street's expectations and above year-ago earnings of 45 cents a share.

The company's average shares outstanding were 425.6 million as of Sept 30, compared with 484.9 million a year earlier.

Quarterly sales rose slightly to $5.54 billion, from $5.43 billion a year earlier. Wall Street was expecting revenue of $5.36 billion.

WEAK OUTLOOK

"We expect the fourth quarter will be better than the fourth quarter last year and slightly better than the third quarter," said Chief Executive John Faraci, on a conference call.

Analysts, on average, have forecast fourth-quarter earnings of 70 cents a share, while the company's forecast indicates that earnings will be only slightly higher than the 57 cents it posted in the third-quarter.

In a note to clients, Banc of America analyst George Staphos said the fourth-quarter outlook was somewhat disappointing.

Forest products companies on both sides of the Atlantic have been plagued by overcapacity issues, rising raw material costs, lagging paper prices and weak land sales.