International Paper Sees Improving Demand

MEMPHIS, Tenn. (TheStreet) -- International Paper(IP Quote) surpassed Wall Street profit targets by 13 cents a share in the third quarter, though revenue declined by 13% from a year ago.

Shares of the company rose modestly in the early going Wednesday, trading at $22.90, up 27 cents, or 1.2%.

IP said it received a huge tax credit in the quarter ($320 million), offset by restructuring charges and other items. Excluding all this, the company said its adjusted per-share profit was 37 cents, above analysts' consensus estimates of 24 cents.

Including the special items, IP earned $371 million, or 87 cents a share. The company's year-ago bottom line, which also included a series of charges and gains, was $149 million, or 35 cents a share.

Revenue amounted to $5.9 billion -- in-line with expectations. In the third quarter of 2008, IP's top line totaled $6.8 billion.

In these anxious times, with investors scouring earnings reports for any signs at all of a nascent economic recovery, nearly every industry can be construed as a "bellwether" -- and paper is no different. When it comes to the Memphis-based wood-pulping giant, one can judge the packaging needs of its industrial and retail buyers. Are those customers selling enough stuff to warrant a lot of International Paper-made boxes?

"At the end of the third quarter, we began to see some modest improvements in demand in some segments of our paper and packaging businesses," IP's chief, John Faraci said in prepared remarks.