Operating profits were US$426m (€347m) in Q2 2012, down from $462m in Q1 2012, with the quarter being a peak period for maintenance.
This included a boiler project in Mogi Guaçu, Brazil and a paper machine at Koryazhma, expected to start up in Q4 and a new fibre line at a mill in Bratsk, both in Russia.
The company added they had the first major outage in their Indian plant which lasted 34 days and they were seeing a 10% improvement in pulp production per day.
Quarterly net sales were $7.1bn for the period ending 30 June 2012 compared with $6.7bn in Q1 2012 and $6.6bn in Q2 2011.
Earnings in Q2 2012 totaled $203m, compared with $338m in Q2 2011 due to seasonally peak maintenance outage expenses and an unfavourable non-cash foreign exchange swing at the Ilim joint venture in Russia.
The firm said these were partially offset by the Temple-Inland integration benefits and synergies tracking ahead of plan and cost and pricing improvements.
Segment outlook
Industrial Packaging operating profit was $367m compared with $278m Q1 2012. Strong results were driven by a full quarter of Temple-Inland earnings and synergies four to five months after completing the takeover and the pass through of export price increases.
Printing Papers operating profit was $106m compared with $145m in Q1 2012. Significantly higher planned maintenance outages in the quarter were partially offset by price increases in Brazil and Russia as well as improved price realizations on US exports.
Consumer Packaging operating profit was $63m compared with $96m in Q1 2012. The quarter was impacted by higher costs attributable to maintenance expenses and continued soft business conditions.
Special items in Q2 2012 included a pre-tax charge of $62m ($38m after taxes) to adjust the value of the assets of the Hueneme mill in Oxnard, California to their fair value in anticipation of divestiture.
Pre-tax charges of $35m ($22m after taxes) for integration costs related to the Temple-Inland acquisition and $9m pre-tax charges ($5m after taxes) for costs associated with the announced Q3 2012 divestiture of the Hueneme mill and two other containerboard mills.
In a conference call to discuss the results, company chairman and CEO, John V. Faraci, said the world is “going sideways in terms of the environment we're operating in” but there was a “lot of headroom, a lot of levers we're pulling.”
“The big changes there, we will have less outages during the quarter by about $130 million. We've got the divestiture impact of the 3 mills that we sold. That's roughly $30 million…
“Looking at our margins…the key businesses in North America, I can see -- I think you could see that margins are -- number one, they're strong; and number two, we're doing better than our competitors.
“The synergies from Temple are coming more and faster, and they're not CapEx-driven. They're really execution-driven.”
Graphic Packaging Q2
Meanwhile, Graphic Packaging has reported Paperboard Packaging sales, which comprised 83.5% of total Q2 2012 net sales, increased 0.2% compared to Q2 2011.
Net sales in the Flexible Packaging segment increased 19% compared to Q2 2011, driven by the addition of Delta Natural Kraft, LLC and Mid-America Packaging, LLC on 8 December, 2011.
In a conference call discussing the results, company CEO David Scheible, said the focus on pouch carton and pasta and food service has served the firm well and volume was good.
“It's good but it's not great compared to where you would think we would be historically from a recovery of the kind of recession that we saw.
“So I'm happy versus where we are, but disappointed in sort of what we would expect on a historical basis.
“I would expect volume to be much stronger than it has been. But we're busy.”
The firm added in the second half on 2012, there will be 20 days of maintenance downtime for recovery boiler checks in two virgin board mills with the Macon outage in Q3 and West Monroe in Q4.