International Paper Company IP posted adjusted operating earnings of 15 cents per share for the first quarter of 2026, missing the Zacks Consensus Estimate of 18 cents by 16.7%. The figure declined 11.8% from 17 cents a year ago.
Including one-time items, the company reported earnings of 14 cents per share against a loss of 28 cents in the year-ago quarter.
Net sales were $5.97 billion, up 13.4% year over year, but below the consensus mark of $6.05 billion by 1.2%.
International Paper Company Price, Consensus and EPS Surprise
International Paper Company price-consensus-eps-surprise-chart | International Paper Company Quote
IP’s Costs Rose Faster Than Operating Leverage
Cost of products sold increased 11.5% year over year to $4.24 billion in the quarter. Gross profit rose 18% year over year to $1.73 billion. The gross margin came in at 28.9% compared with the year-ago quarter’s 27.7%.
Selling and administrative costs were $510 million, which increased 4.7% from $487 million in the prior-year quarter. The adjusted operating income in the quarter was $188 million, 11% higher than $169 million in the first quarter of 2025. Adjusted operating margin contracted to 3.1% from 3.2% in the year-ago quarter.
International Paper Sees Diverging Regional Performance
Packaging Solutions North America: The segment’s sales were $3.63 billion, down 2.1% from the prior-year figure. Our projection for the segment’s sales was $3.61 billion.
The segment reported an operating profit of $248 million compared with an operating profit of $142 million in the prior-year quarter. Our projection for the segment was $304 million.
The segment witnessed a sequential increase in the cost of products sold due to higher operating costs affected by winter storm impacts. Input costs rose due to higher natural gas costs and utility costs driven by the winter storm. Profitability, however, improved on a year-over-year basis.
Packaging Solutions EMEA: The segment’s sales were $2.32 billion, up from the last-year figure of $1.55 billion. Our expectation for the segment’s sales was $2.39 billion.
The segment reported an operating loss of $51 million against the prior-year quarter’s operating profit of $46 million. Our projection for the segment was a loss of $46 million. The segment’s results were impacted by higher energy costs.
The company had earlier announced plans to separate its PS North America and PS EMEA operations into two independent, publicly traded companies. The transaction is intended to create two scaled regional leaders in packaging solutions, each supported by dedicated management teams, distinct business models and attractive financial profiles. It is expected to be completed within 12–15 months, subject to customary closing conditions.
IP’s Cash Generation Improved After Portfolio Moves
International Paper generated $611 million of cash from operating activities in the first quarter of 2026 compared with usage of $288 million in the year-ago quarter. IP produced free cash flow of $94 million in the quarter.
The company also received $1.1 billion of net proceeds from the sale of the Global Cellulose Fibers business and used part of that cash to reduce debt by $660 million.
Cash and temporary investments aggregated around $1.24 billion at the end of the first quarter of 2026 compared with $1.15 billion at the end of 2025.
At the end of the first quarter, IP’s long-term debt stood at $8.18 billion, lower than $8.8 billion as of 2025-end.
International Paper Updates 2026 EBITDA View
For the second quarter, the company guided adjusted EBITDA from continuing operations of $520-$570 million, implying a step-down from the first quarter’s adjusted EBITDA of $677 million as seasonal and cost factors persist.
Management updated its outlook to reflect what it described as a volatile environment, with ongoing inflation and macro pressures. For full-year 2026, International Paper provided a target range of $3.20-$3.50 billion in adjusted EBITDA from continuing operations. The company had earlier provided a range of $3.5-$3.7 billion for 2026.
The company emphasized disciplined execution, improving reliability across its network and rigor around capital allocation as key levers to deliver against the updated framework.
IP Stock’s Price Performance
The company’s shares have lost 26.5% in the past year compared with the industry’s 11.8% decline.
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International Paper’s Zacks Rank
IP currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Industry Peers This Quarter
Packaging Corporation of America PKG posted adjusted earnings of $2.40 per share in the first quarter of 2026, up 3.9% from $2.31 a year ago. The result beat the Zacks Consensus Estimate of $2.17 by 10.6%. Packaging Corp.’s net sales rose 10.6% year over year to $2.37 billion but missed the consensus mark of $2.41 billion by 1.9%.
Smurfit Westrock Plc SW posted adjusted earnings of 33 cents per share for the first quarter of 2026, down 51.5% from the year-ago period. The figure missed the Zacks Consensus Estimate of 36 cents.
Smurfit Westrock’s net revenues were $7.71 billion, up 0.7% year over year, but missed the consensus estimate of $7.76 billion.
One Paper & Related Product Stocks Awaiting Results
Rayonier Advanced Materials RYAM is slated to release first-quarter 2026 results on May 5. The Zacks Consensus Estimate for the bottom line is pegged at a loss of 62 cents per share. Rayonier Advanced had posted a loss of 49 cents per share in the year-ago quarter.
The consensus estimate for Rayonier Advanced Materials’ top line is pegged at $297.5 million, indicating a 16.4% decline from the prior-year reported figure.
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International Paper Company (IP): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).