Cost cutting and improved pricing led to the company’s fourth-quarter earnings.

STAMFORD, Conn. (AP) – International Paper Co., the world’s largest paper company, swung to a profit in the fourth-quarter, citing cost cutting and improved pricing for some products.

The Stamford-based company, with Maine mills in Jay and Bucksport, reported net income Monday of $48 million, or 10 cents per share, for the October-December period compared with a net loss of $130 million, or 27 cents per share, for the same period a year ago.

Excluding one-time items, earnings were $110 million, or 23 cents per share. That beat the consensus estimate of 18 cents a share by analysts surveyed by Thomson First Call.

“It looks like they were slightly better than we expected,” said Mark Wilde, managing director with Deutsche Bank-North America in New York. “It looks to me like the business is slowly getting better.”

The results are benefitting from an increase in land sales, Wilde said. He said the company has improved the amount of disclosures it makes in reporting earnings.

Revenue for the fourth quarter was $6.5 billion, up from $6.3 billion a year ago.

“Despite the normal seasonal slowdown in demand and continued price pressure in uncoated paper and industrial packaging, we benefited from improved pricing in lumber and plywood as well as pulp,” said John Faraci, International Paper chairman and chief executive officer. “Overall, the business environment was tough throughout 2003, with demand lagging U.S. economic growth – especially for paper and packaging products – and weak pricing. However, good operational performance and our continued focus on improving our internal costs and product mix partially offset high raw material and pension costs.”

In 2004, International Paper expects a slow start in the first quarter followed by a pickup in demand and pricing for the balance of the year, Faraci said.

“We do see signs, in talking to many of our customers, that their business is getting better off a low base,” Faraci said in a conference call with analysts. “We think the marketplace is improving.”

In terms of segments, fourth-quarter earnings in the forest products business rose 51 percent to $236 million as a result of higher lumber and plywood prices. But profits were lower in the printing papers and industrial and consumer packaging businesses, hurt by lower prices and weak overseas demand.

For the year, International Paper reported net earnings of $302 million, or 63 cents per share, on revenue of $25.2 billion. That compared with a loss of $880 million, or $1.83 per share, on revenue of $25 billion in 2002.

In afternoon trading on the New York Stock Exchange, International Paper shares were up 48 cents at $42.75.

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On the Net:

www.internationalpaper.com

AP-ES-02-02-04 1446EST