Sales jump, profits slide for owner of North Charleston paper mill
The owner of the North Charleston paper mill easily cracked the $1 billion revenue mark in 2012 for the first time, helped by a large acquisition and a price increase it passed onto customers.
But profits at KapStone Paper and Packaging Corp took a dive because of a reduced tax benefit it booked in 2011.
The company’s stock jumped 5 percent Thursday.
KapStone said it earned $62.5 million last year on revenues of $1.2 billion. Profits were off by half from 2011. Sales jumped 34 percent from the prior years, driven by higher paper and containerboard prices and the October 2011 acquisition of U.S. Corrugated Inc.
For the fourth quarter, net income skidded 86 percent to $10.1 million from the year-earlier quarter, when KapStone’s bottom line got a $56.6 million boost from a tax benefit. Sales for the October-December period increased 12 percent to about $301 million.
Roger W. Stone, chairman and chief executive officer, said the fourth quarter capped “a transformational year for KapStone as we successfully integrated our 2011 acquisition of U.S. Corrugated.”
“The acquisition has been a significant contributor to KapStone’s earnings this year, and we expect additional benefits in 2013,” Stone said in a written statement.
The $330 million U.S. Corrugated purchase included a recycling mill in Cowpens, east of Spartanburg, and 14 boxmaking plants in the eastern and midwestern U.S.
The company is spending $29 million at its Cooper River mill to upgrade a paper machine that makes “ultra high-performance” grades of lightweight linerboard for manufacturers of corrugated cardboard.
It spent $4 million on the North Charleston improvement project in 2012, and it expects to shell out another $19 million this year.
Stone said KapStone entered 2013 with “positive momentum.”
“We are confident that we are in an excellent position to continue to grow the company profitably,” he said.
KapStone will mark the fifth anniversary this summer of its $471 million purchase of the landmark North Charleston paper mill and a Summerville-based sawmill business from MeadWestvaco Corp.
The company released it earnings after U.S. stock markets closed Wednesday. Shares of KapStone jumped $1.24, or 5 percent, Thursday, finishing at $26.10.Reach John P. McDermott at 937-5572.