Faraci said his company expected the Temple-Inland merger to take a full two years, but it has largely been completed in just nine months. He said next year will be about optimizing that acquisition, not about integrating it. International Paper expects to see far more than the $350 million in cost savings it initially projected.
Faraci also noted that International Paper is still seeing strong cash flows, which means it will likely continue to raise its dividend. That cash flow is being helped by the company's first price increase in over two and a half years, which gives a boost to its gross margins.
When asked about China, an important market for the company, Faraci said the China business is split almost in half between packaging for products that stay in China and those that get exported. The exported products are down 15% to 20%, he said, but internally they're strong, resulting in a 2% to 3% increase overall.
Turning to its U.S. business, Faraci confirmed that International Paper is benefiting from a transition from customers buying locally to buying online. He said his company's corrugated packaging business will be stronger this holiday season than it was last year. With input costs falling, Faraci said there will be lots of room for margin expansion in 2013.Cramer continued his recommendation of International Paper.
Reinventing ItselfIn his second "Executive Decision" segment, Cramer sat down with Chris Viehbacher, CEO of Sanofi (SNY), another company that's taking control of its own destiny by reinventing itself outside of traditional patented drugs. Sanofi has delivered a 39% return, including dividends, since Cramer got behind the company in September 2011. Viehbacher explained that Sanofi decided a few years ago that it wanted to get off the "patent treadmill" where the company needed to constantly invent drugs to replace older ones losing patent protection. In fact, nearly 25% of Sanofi's sales came off patent between 2008 and 2012. That's why the company expanded into areas where there were still high barriers of entry but did not necessarily require patents.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV