International PaperIP42,00 $
International Paper (NYSE: IP) - American paper manufacturer. The company was supposed to be the beneficiary of the pandemic, but something went wrong. Let's figure it out, does it make sense to count on stable dividend payments?.
When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
What do they earn
IP produces paper. According to the company's annual report, its revenue is divided as follows:
- Industrial Packaging — 84,31%. This is the paper for packaging. Segment operating margin — 10,03% from its proceeds. By type of paper, the products of the segment are divided as a percentage of the volume of delivered goods of the segment:
- corrugated packaging — 60,36%;
- containerboard — 16,19%;
- by-products — 12,44%;
- packing paper — 1,04%;
- drywall — 1,3%;
- sales of different types of paper in other regions — 8,67%.
- Cellulose fiber — 15,69%. Materials (edit), which are used for consumer products like diapers, products in the field of feminine hygiene, Napkins. The segment's products are in demand in industrial production. Segment operating margin – minus 0,1% from its proceeds, unprofitable segment.
Previously, there was also a third segment – printed paper, but it was spun off as a separate issuer, Sylvamo..
Revenue by country and region:
- USA - 86,6%.
- Europe, Middle East and Africa - 8,31%.
- Asian countries - 1,06%.
- Unnamed countries in the Americas — 4,03%.
Arguments in favor of the company
Paydemic. Ongoing pandemic will drive demand for paper from online commerce and food delivery workers. And let there sometimes be moments of "thaw" with the easing of the regime of restrictions, in general, the situation with the pandemic will become a more or less standard state of affairs.
How was Camus: «... The plague microbe never dies, never disappears, that he can sleep for decades somewhere in the curls of furniture or in a stack of laundry, that he is patiently waiting in the bedroom, in the basement, in a suitcase, in handkerchiefs and papers and that, maybe, such a day will come to the mountain and in the instruction of people, when the plague awakens the rats and sends them to take to the streets of a happy city.".
Pay-to-pay. IP pays 1,85 $ dividend per share per year, what gives 3,81% per annum. The profitability is quite high and may well attract fans of payments to the stock.
What can get in the way
Raise. About a third of the company's employees are members of trade unions.. With a shortage of supply in the U.S. labor market and rising wages there, I would expect major strikes by IP workers., what will sag its financial performance. Also, the company will have to agree to a salary increase in these conditions., from which its margin will suffer even more.
Buy. 11 In March, there were reports that, that the company wants to sell its stake in 50% in Russian assets — in Ilim. Something tells me, that at a favorable price for IP this will not work.
Sisyphus margin. Unfortunately, the company has not yet become a bright beneficiary of the pandemic: the attendant logistical difficulties hit her business hard and are hitting her business hard, offsetting the growth in demand for packaging paper. Recent revenue growth has been offset by rising costs – and rising costs are to blame..
Profit indicators of the company, usd per share
| 2к2021 | 3к2021 | 4к2021 | 1к2022 | 2к2022 | |
|---|---|---|---|---|---|
| Current | 1,00 | 1,35 | 0,78 | 0,76 | – |
| Forecast | 1,00 | 1,43 | 0,89 | 0,52 | 1,12 |
Indicators of the company's revenue, billion dollars
| 2к2021 | 3к2021 | 4к2021 | 1к2022 | 2к2022 | |
|---|---|---|---|---|---|
| Current | 5,62 | 5,71 | 5,09 | 5,24 | – |
| Forecast | 5,62 | 5,84 | 5,06 | 5,02 | 5,32 |
Accounting. Company, maybe, and dumped some of the debts on Sylvamo, but its debt burden has not diminished.. It has over $16 billion in debt., of which 4.142 billion need to be repaid within a year.
Basically, to repay urgent debts, the company should have enough money: there are 1.11 billion in accounts and 3.363 billion in counterparty debts. But in general, large debt in the face of rising rates is, certainly, additional weight on the legs of any issuer: it becomes harder to service debts.
In combination with the above-mentioned problems of rising costs, this increases the risks of the company cutting dividends and the resulting fall in shares..
The future has not yet arrived. Periodically, the pandemic will be replaced by periods of "thaw" - so that workers do not become angry and do not begin to commit illegal acts.. Now we live in just such a period.: in the same US, there is an increase in consumer activity at a level almost as before the pandemic. In such periods, IP revenue growth will stall, what, certainly, will not have a good effect on its quotes.
Resume
If you take these stocks now, then only for the sake of dividends. But a high debt burden greatly increases the risks of their reduction.. As for the rest, I can't say it., to a strongly outstanding business: the beneficiary of the pandemic is considered a company only conditionally.
