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Investing.com - International Paper (NYSE:IP), a $24.5 billion market cap paper and packaging giant with annual revenues of $19.9 billion, announced strategic changes to its North American operations on Wednesday, maintaining its Buy rating and $59.00 price target from Truist Securities. According to InvestingPro data, the company currently trades at $46.49, suggesting potential upside based on analyst targets ranging from $40 to $65.
The paper and packaging company plans to exit the molded fiber business and convert its Reno, Nevada facility to support packaging operations. International Paper will also close its packaging facility in Marion, Ohio and recycling facility in Wichita, Kansas, affecting approximately 110 hourly and 24 salaried positions in the United States. Despite these operational changes, the company maintains its impressive 55-year streak of consecutive dividend payments, currently offering a 3.99% yield.
The company will sell its containerboard mill in Xalapa, Mexico (approximately 27,000 tons per RISI) and recycling plants in Xalapa and Apodaca to private company APSA. International Paper cited prioritizing the right geographies, customers, and products to support growth as rationale for these actions.
These moves align with International Paper’s 80/20 strategy to streamline North American operations and optimize its box plant and mill footprint. Prior to this announcement, the company had closed seven box plants and one recycling plant, yielding savings of approximately $70 million, and closed the Red River, Louisiana mill for savings of approximately $170 million.
At its Investor Day in March, International Paper outlined potential to realize $500-600 million of cost reductions in its mill system through multiple avenues including footprint rationalization, which implies another 2-3 sizable mill closures assuming savings of approximately $170 million per mill. With 8 analysts recently revising earnings estimates downward, investors can access comprehensive analysis and additional insights through InvestingPro’s detailed research reports, which provide in-depth coverage of over 1,400 US stocks.
In other recent news, International Paper is exploring the possibility of establishing a new sustainable packaging facility in Salt Lake City, Utah. This move is part of the company’s strategic growth plans to expand its manufacturing capabilities in the United States, especially in the western region. UBS analysts have initiated a Buy rating on International Paper, highlighting its growth potential in the paper packaging sector. They forecast significant EBITDA growth from 2025 to 2027, driven by linerboard price increases and cost savings. Truist Financial (NYSE:TFC) Corporation reports rising containerboard prices in Italy and Spain, which could positively impact International Paper. Additionally, Georgia-Pacific’s announcement of the Cedar Springs mill closure is expected to reduce containerboard supply, potentially stabilizing the market. Jefferies analysts see this as a positive development, likely leading to increased operating rates. These recent developments indicate strategic shifts and market adjustments in the paper and packaging industry.
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