Updated from 12:21 p.m. EDT.
An unexpected tax windfall is giving paper mills a boost -- none more so than
, which saw profits skyrocket 93% in the first quarter, offsetting sluggish sales.
Shares of the company were buoyed 15%, to $12.50, in afternoon trading.
Struggling paper companies recently discovered that they qualify for federal tax credits intended to promote the development of alternative fuels because they use a byproduct in the paper-making process to power their mills.
During the quarter earnings reached $257 million, or 61 cents a share, from $133 million, or 31 cents, in the year-ago quarter. Excluding the credit and other one-time items, International Paper earned 8 cents per share, beating Wall Street expectations of a loss of 5 cents a share.
Sales remained flat at $5.7 billion.
The company received pre-tax credit of $540 million, or $330 million after taxes, during the first quarter for the alternative fuel mixture credits.
While some senators want to cut paper companies from the program, resistance is expected to keep that from happening in the near future. Cost-cutting initiatives also helped International Paper, as well as its competitors.
On Wednesday rivals
both posted better-than-expected quarterly earnings, as they began reaping rewards from cost cuts.
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