International Paper posts $33 mln profit from Ilim stake in Q3
MOSCOW. Nov 8 (Interfax) - U.S. company International Paper generated a $33 million profit from its stake in Ilim Group in July-September 2012 after an unsuccessful second quarter thanks to exchange rate fluctuations.
In its financial statement for Q3, International Paper reflected a $33-million profit from its stakes in the Russian joint venture, compared with an equity loss of $25 million in Q2 and profit of $1 million a year ago.
"Weak pulp prices and lower sales volumes of pulp to the Chinese market negatively impacted operational results. Results were also impacted by an after-tax foreign exchange gain of $21 million in the current quarter, after realizing an after-tax loss of $41 million in the second quarter, both due to non-cash adjustments associated with the Ilim Group joint venture's U.S. dollar denominated debt," the financial report said.
For January-September 2012, International Paper generated net earnings of $48 million from its stake in Ilim, compared to $109 million the year before.
Ilim's Russian shareholders, Zakhar Smushkin and brothers Boris and Mikhail Zingarevich, created the joint venture with International Paper on an equal footing in 2007. The company was renamed from Ilim Pulp to Ilim Group.
The 2007 shareholder agreement envisaged that after two years the JV's owners could under certain terms initiate the purchase of a 50% stake from the other party. International Paper puts the current value of the 50% stake in Ilim at $400-$450 million, or $800-$900 for the entire company. That is nearly 50% lower than the valuation set out in the financial statement for Q2 ($800-$850 million for half). International Paper does not explain the reasons behind the sharp decline, noting only that neither the Russian nor American shareholders are planning on initiating a buy-out procedure.
Until this year, Ilim's results were calculated in International Paper's financial statements with a quarterly lag due to the complexity of the Russian group's structure and the necessity of bringing its financial reports in compliance with U.S. requirements. Starting in Q1 2012, the U.S. company started reflecting Ilim's results without a lag.
