NEW YORK (AP) — International Paper Co.’s first-quarter profit nearly doubled, as a huge tax credit for alternative fuel use offset sluggish sales.

Like other paper makers, IP is getting a boost from a federal program designed to encourage use of alternative fuels, including a blend of diesel and a substance known as “black liquor” that comes from producing pulp.

For IP, the program gave the company a $330-million tax credit in the first quarter, boosting its net income to $257 million, or 61 cents per share, from $133 million, or 31 cents per share, a year earlier.

During the quarter, IP said it also benefited from lower input costs and spending.

Excluding the big credit and other one-time items, IP earned 8 cents per share, beating Wall Street expectations of a loss of 5 cents per share.

Shares rose $1.01, or 9.3 percent, to $11.91 in pre-market trade Thursday.

Quarterly sales were unchanged at $5.67 billion, exactly what Wall Street anticipated.

IP and its rivals aggressively cut mill capacity in the quarter to match plunging demand for paper, cardboard box material and envelopes amid the U.S. recession.

Still, CEO John Faraci called current conditions “the weakest economic environment we’ve seen in decades.”

Printing paper sales fell to $1.33 billion from $1.45 billion in the year-earlier quarter, while the company’s distribution revenues declined to $1.58 billion from $1.99 billion. Consumer packaging slipped to $715 million from $770 million and forest products plunged to $5 million from $25 million.

Meanwhile, industrial packaging sales rose to $2.18 billion from $1.44 billion. The gain reflected contributions from the recent acquisition of Weyerhaeuser Co.’s recycling business plus IP’s corrugated packaging revenue, which doubled, offsetting declines in other parts of the company’s industrial packaging segment.

IP is in line to receive slightly more than $1 billion this year from its participation in the alternative fuel cash tax credit program.

Although several senators want to cut paper companies from the program, resistance from colleagues is expected to keep that from happening any time soon.

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