Problem Analysis & Description. Net Sales For International

Better Essays

Problem Analysis & Description
Net Sales for International Paper Company (IP) decreased from $23,617 million in 2014 to $22,365 million in 2015 (“Annual Performance Summary 2015”). While these sales decreased overall, there appeared to be a greater decrease in sales for consumer packaging than for any other department. Consumer packaging has seen a dramatic decrease in sales for the second year in a row. According to IP’s 10k, consumer packaging sales are projected to be lower than average for the first quarter in 2016 as well. Operating profit for consumer packaging went from 178 million to (25) million from 2014 to 2015. (“Annual Performance Summary 2015”). According to International Paper’s 2015 10K, the steep decline in consumer …show more content…

Another possibility is that the cost of manufacturing consumer packaging goods has increased so much for IP that even an increase in demand for these products does not outweigh the cost.
Insert net sales chart
Income has been declining for International Paper Company in recent years. According to IP’s 10k, their income declined from 2,476 million to (1,332) million to (124) million from 2013 to 2014 to 2015 respectively. The decline in profit is mostly due to the decline in sales in recent years. Sales during the most recent quarter saw a (1.97) growth. Trailing twelve month growth compared to last year saw (7.54) growth. IP’s 4 year growth rate is at a low of (5.38) (“Financial Highlights”). While IP has negative growth, their growth is significantly less than the negative growth than industry, sector, and S&P 500 (International Paper “Financial Highlights”). Since the entire industry of paper mills is facing a steep decline in growth, it is expected that IP’s sales would also decline. The market for paper products in changing, leading to a decline in sales across the board. Paper imports are increasing as well as prices of raw materials and they are projected to continue increasing according to IBISWorld’s projections. Although IP appears to be doing a better job than most of their industry at keeping sales from falling too dramatically due to these factors, their sales and income are still affected negatively by these changes.
Because of the decline in

Get Access