international paper company investor presentation

International Paper Reports Third Quarter 2023 Results

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Oct 26, 2023, 06:55 ET

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MEMPHIS, Tenn. , Oct. 26, 2023 /PRNewswire/ -- International Paper (NYSE: IP ) today reported third quarter 2023 financial results.

THIRD QUARTER 2023 HIGHLIGHTS

• Net earnings of $165 million ( $0.47 per diluted share); Adjusted operating earnings (non-GAAP) of $224 million ( $0.64 per diluted share)
• $75 million of earnings achieved from Building a Better IP initiatives, bringing year-to-date to $195 million , exceeding full-year targets
• Cash provided by operations of $468 million , bringing year-to-date to $1.3 billion
• Returned $160 million to shareholders in dividends, bringing year-to-date to $679 million in share repurchases and dividends
• Completed the sale of our Ilim Joint Venture interest for $508 million

"Our third quarter results came in as expected, and we are encouraged by continuing demand recovery across our portfolio," said Mark Sutton , Chairman and Chief Executive Officer. "We exceeded our full-year target for Building a Better IP through commercial and process improvement initiatives. Our operations continue to perform reliably with a focus on controlling costs. However, in this challenging macro environment, we are not satisfied with our absolute results. We are taking actions to structurally reduce fixed costs in our mill system, while optimizing our supply chain and investing in our box capabilities to grow with customers."

SEGMENT INFORMATION Business segment operating profits are used by International Paper's management to measure the earnings performance of the Company's businesses and are calculated as set forth in footnote (f) below under "Sales and Earnings by Business Segment". Third quarter 2023 net sales by business segment and operating profit (loss) by business segment compared with the second quarter of 2023 and the third quarter of 2022 are as follows:

Industrial Packaging  operating profits (losses) in the third quarter of 2023 were $325 million compared with $304 million in the second quarter of 2023. In North America , earnings improved despite lower sales prices for containerboard and corrugated boxes and an unfavorable geographic mix. The earnings improvement was driven by higher sales volumes for containerboard, lower planned outage costs and favorable adjustments related to employee benefit costs. Economic downtime was lower, improving mill operating costs. Input costs increased, primarily for energy, freight and recovered fiber. In EMEA, earnings were lower, driven by seasonally lower volumes, an unfavorable product mix and lower containerboard sales prices.

Global Cellulose Fibers operating profits (losses) in the third quarter of 2023 were $27 million compared with $30 million in the second quarter of 2023. Earnings were slightly lower as lower pulp pricing was mostly offset by lower distribution, input and operating costs, including favorable adjustments related to employee benefit costs. Sales volumes improved as seasonality was more than offset by an improving market environment.

EQUITY METHOD INVESTMENT - ILIM JOINT VENTURE The Company completed the sale of its investment in the prior Ilim joint venture in the third quarter of 2023 for proceeds of $508 million ( $472 million net of transaction costs). All current period and historical results have been adjusted to reflect Ilim as a discontinued operation. 

CORPORATE EXPENSES Corporate expenses, net was expense of $20 million for the third quarter of 2023 compared with expense of $8 million in the second quarter of 2023.

EFFECTIVE TAX RATE The reported effective tax rate for the third quarter of 2023 was 17%, compared to 13% in the second quarter of 2023. The lower tax rate in the second quarter reflects a tax benefit related to the closure of the 2015-2016 IRS audit.

The operational effective tax rate was 18% for the third quarter of 2023 compared to 22% in the second quarter of 2023. The lower operational effective tax rate in the third quarter was primarily due to increased U.S. research and development tax credits and lower than estimated U.S. income taxes on foreign earnings.

The operational effective tax rate is a non-GAAP financial measure and is calculated by adjusting the income tax provision from continuing operations and rate to exclude the tax effect of net special items and non-operating pension expense (income). Management believes that this presentation provides useful information to investors by providing a meaningful comparison of the income tax rate between past and present periods.

EFFECTS OF SPECIAL ITEMS Net special items in the third quarter of 2023 amount to a net after-tax charge of $22 million ( $0.06 per diluted share) compared with a benefit of $27 million ( $0.08 per diluted share) in the second quarter of 2023 and a benefit of $551 million ( $1.53 per diluted share) in the third quarter of 2022. Net special items in all periods include the following charges (gains):

DISCONTINUED OPERATIONS, NET OF TAXES Discontinued operations, net of taxes include the equity earnings associated with our Ilim joint venture. Discontinued operations, net of taxes also includes the following special items charges (gains):

EARNINGS WEBCAST The company will host a webcast today to discuss earnings and current market conditions, beginning at 10 a.m. ET ( 9 a.m. CT ). All interested parties are invited to listen to the webcast via the company's website by clicking on the Investors tab and going to the Events & Presentations page at https://www.internationalpaper.com/investors/events-presentations . A replay of the webcast will also be on the website beginning approximately two hours after the call.

Parties who wish to participate in the webcast via teleconference may dial +1 (234) 720-6995 or, within the U.S. only, (844) 291-6362, and ask to be connected to the International Paper third quarter earnings call. The conference ID number is 266985. Participants should call in no later than 9:45 a.m. ET ( 8:45 a.m. CT ). An audio-only replay will be available for ninety days following the call. To access the replay, dial +1 (402) 970-0847 or, within the U.S. only, (866) 207-1041 and when prompted for the conference ID, enter 7315213.

About International Paper International Paper (NYSE: IP ) is a global producer of planet-friendly packaging, pulp and other fiber-based products, and one of North America's largest recyclers. Headquartered in Memphis, Tenn. , we employ approximately 39,000 colleagues globally who are committed to creating what's next. We serve customers worldwide, with manufacturing operations in North America , Latin America , North Africa and Europe . Net sales for 2022 were $21.2 billion . Additional information can be found by visiting internationalpaper.com.

Visit https://www.internationalpaper.com/investors for more information regarding International Paper, including a slide presentation regarding the third quarter 2023. We use this website as a primary channel for disclosing key information to our investors, some of which may contain material and previously non-public information.

Certain statements in this press release that are not historical in nature may be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "believes," "estimates" and similar expressions identify forward-looking statements. These statements are not guarantees of future performance and reflect management's current views and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. Factors which could cause actual results to differ include but are not limited to: (i) risks with respect to climate change and global, regional, and local weather conditions, as well as risks related to our ability to meet targets and goals with respect to climate change and the emission of greenhouse gases and other environmental, social and governance matters; (ii) the level of our indebtedness and changes in interest rates (including the impact of current elevated interest rate levels); (iii) the impact of global and domestic economic conditions and industry conditions, including with respect to current negative macroeconomic conditions, inflationary pressures and changes in the cost or availability of raw materials, energy sources and transportation sources, supply chain shortages and disruptions, competition we face, cyclicality and changes in consumer preferences, demand and pricing for our products, and conditions impacting the credit, capital and financial markets, including possible instability in such markets and/or disruptions to the banking system due to potential or actual bank failures; (iv) domestic and global geopolitical conditions, military conflict (including the Russia / Ukraine conflict, the conflict in Israel and surrounding areas, the possible expansion of such conflicts, and the potential geopolitical and economic consequences associated therewith), changes in currency exchange rates, trade protectionist policies, downgrades in our credit ratings, and/or the credit ratings of banks issuing certain letters of credit, issued by recognized credit rating organizations; (v) the amount of our future pension funding obligations, and pension and healthcare costs; (vi) unanticipated expenditures or other adverse developments related to compliance with existing and new environmental, tax, labor and employment, privacy, anti-bribery and anti-corruption, and other U.S. and non-U.S. governmental laws and regulations; (vii) any material disruption at any of our manufacturing facilities or other adverse impact on our operations due to severe weather, natural disasters, climate change or other causes; (viii) risks inherent in conducting business through joint ventures; (ix) our ability to achieve the benefits expected from, and other risks associated with, acquisitions, joint ventures, divestitures, spinoffs and other corporate transactions, (x) cybersecurity and information technology risks, including as a result of security breaches and cybersecurity incidents; (xi) loss contingencies and pending, threatened or future litigation, including with respect to environmental related matters; (xii) our exposure to claims under our agreements with Sylvamo Corporation; (xiii) our failure to realize the anticipated benefits of the spin-off of Sylvamo Corporation and the qualification of such spin-off as a tax-free transaction for U.S. federal income tax purposes; and (xiv) our ability to attract and retain qualified personnel, particularly in light of current labor market conditions. These and other factors that could cause or contribute to actual results differing materially from such forward-looking statements can be found in our press releases and reports filed with the U.S. Securities and Exchange Commission. In addition, other risks and uncertainties not presently known to the Company or that we currently believe to be immaterial could affect the accuracy of any forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE International Paper

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New International Paper CEO details recovery plan after ‘totally unacceptable’ results

IP has “underperformed on every meaningful metric” during the last decade, said CEO Andrew Silvernail, but “we can control our own destiny.”

• New approach: On Wednesday morning, CEO Andrew Silvernail hosted his first earnings call since taking the helm at International Paper on May 1, following Mark Sutton’s retirement . He came into the ring punching and spent the majority of the call detailing significant strategy changes to turn around IP’s performance deterioration over the last 10 years. “My team wants to win. They are tired of getting their butt kicked,” Silvernail said. 
• Q2 overview:  International Paper’s sales increased sequentially in the second quarter of 2024, reflecting improvements in price and volumes. By segment, e-commerce showed strong growth in what executives described as a post-destocking  environment; sales to food and beverage customers were stable, with further improvement expected. However, IP’s total packaging volumes   came in below expectations and lagged the overall market, “and that will continue for some time,” Silvernail said.
• Case for change:  Silvernail said executives would make “the case for change” at IP going forward. “We have underperformed on every meaningful metric,” he said. “This is totally unacceptable, and we’re going to fix it.” IP needs to get better at “having clarity of the metrics that drive results for our customers and drive results for our owners,” Silvernail said, adding that the company underinvested in capital expenditures and maintenance relative to competitors.
• 80/20 plan:  Silvernail detailed the so-called 80/20 operating approach, a “data-driven methodology” he hopes will differentiate IP. The plan to drive profitable growth includes simplification to focus on attractive markets while also segmenting discrete businesses and investing appropriate resources into each one. While capacity reductions eventually could occur, Silvernail said that his previous experience with 80/20 shows that business exits typically don’t happen for “an intermediate period” of about a year or two. During the call, Philip Ng, analyst at Jefferies, called Silvernail’s presentation “inspirational” and noted that this represents a “hard reset of the IP culture.” 
• Box business blues: Executives described how IP lags competitors specifically in its box go-to-market strategy, in large part due to a history of underinvestment in the box business. “One of the sins of the past” was IP “chasing bad investments or assets that are deteriorating” rather than making “the right investments” in box plants or mills, Silvernail said. During the company’s   Q4 2023 earnings call in February , Sutton admitted he should have focused more heavily on plant equipment prior to the COVID-19 pandemic and the subsequent box boom. “If I had to do it over, I wish I would have spent much more in physical plant equipment in ‘18, ‘19 and ‘20,” Sutton said at the time. “We hadn't made all of those physical investments in the past.” 
• DS Smith acquisition:  IP’s transformation via 80/20 will not affect operations at DS Smith, the U.K.-based company IP is set to acquire , because there are significant differences between the European and North American markets, Silvernail said. He also noted the companies’ footprints have little overlap. The proxy statement for the pending acquisition will be filed in August, and executives expect to release additional details about the deal prior to the next earnings call in the fall. IP is focused on integrating with DS Smith quickly and efficiently. “What I don't want to do is overburden them with unnecessary administrative B.S. and things that destroy value,” Silvernail said.
• “Messy” short-term results:  While IP expects the outlined business overhaul to produce positive change in the long term, “it will, however, be messy over the next three to four quarters,” Silvernail said. But he emphasized that IP has control of the vast majority of the factors influencing its business. “We can control our own destiny,” he said.
• Outlook:  IP will host a “road show” in September and an investor day in March to share details about the company’s new direction and progress. The company expects box demand growth of 1% to 2% for the year. Executives said they can’t forecast IP’s specific financial outlook for coming quarters due to the pending acquisition and regulatory requirements. They anticipate near-term challenges, including mill outage expenses and seasonally lower volumes.

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International paper company (ip).

• Previous Close 49.05
• Bid 48.09 x 800
• Ask 49.42 x 1000
• Day's Range 48.83 - 49.24
• 52 Week Range 31.77 - 50.68
• Volume 2,674,865
• Avg. Volume 4,540,761
• Market Cap (intraday) 17.035B
• Beta (5Y Monthly) 1.01
• PE Ratio (TTM) 37.44
• EPS (TTM) 1.31
• Earnings Date Oct 31, 2024
• Forward Dividend & Yield 1.85 (3.77%)
• Ex-Dividend Date Aug 15, 2024
• 1y Target Est 50.04

International Paper Company Overview Packaging & Containers / Consumer Cyclical

International Paper Company produces and sells renewable fiber-based packaging and pulp products in North America, Latin America, Europe, and North Africa. It operates through two segments, Industrial Packaging and Global Cellulose Fibers. The company offers linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft; and pulp for a range of applications, such as diapers, towel and tissue products, feminine care, incontinence, and other personal care products, as well as specialty pulps for use in textiles, construction materials, paints, coatings, and others. It sells its products directly to end users and converters, as well as through agents, resellers, and distributors. The company was founded in 1898 and is headquartered in Memphis, Tennessee.

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International Paper sells Russian JV stake to local shareholders -Ilim Group

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Ilim Group is the leader in the Russian pulp and paper industry and one of the industry leaders globally

Business assets, pulp and paper mills.

• Wood chemicals

Corrugated box plants

• Corrugated packaging

Sibgiprobum Engineering and Design Institute https://sibgiprobum.ru/

• Consulting services
• Pre-engineering
• Engineering
• Development of environmental action plans
• Technical and engineering audits of the existing production facilities and proposed design solutions

Offices and representative offices

• Central office in St. Petersburg
• Beijing Office
• Arkhangelsk

Ilim Group produces [1] 76% of all domestically produced market pulp [2] , 17% of packaging materials, 26% of white papers, and 3% of corrugated packaging [3] . The Company's total annual pulp and paper output exceeds 3.6 million tons. 1. Classification of the products manufactured by Ilim Group is provided in Section 2.4, Key Activities, of the Annual Report. 2. As estimated by JSC Ilim Group. 3. As estimated by JSC Ilim Group based on the data of the Federal State Statistics Service of the Russian Federation (Rosstat) for the 12 months of 2023.

Sales markets

Ilim group is the largest investor in the russian pulp and paper industry.

In 2014, the Company completed implementation of its two large-scale investment projects involving construction of new facilities and upgrade of the existing mills in Bratsk (Irkutsk Oblast) and Koryazhma (Arkhangelsk Oblast) with CAPEX of approximately USD 2 bln. The mills are now fully ramped up and ensure stable operation. The Company’s investment plans through 2020 are related to sustainable development of the operating sites not only in terms of increasing production output, but also through business diversification and product portfolio development.

USSR Cabinet Council established a project and general outlay of Kotlass Pulp and Paper Mill’s construction (Arkhangelsk region). The first stage of the mill was started in 1961.

Beginning of Bratsk Pulp and Containerboard Mill’s construction. This mill was designed to be a biggest pulp and paper mill with full conversion of logged wood.

Beginning of Ust-Ilimsk Pulp Mill’s construction. This mill was build in partnership with Bulgaria, Hungary, German Democratic Republic, Poland and Rumania.

Ilim Pulp Enterprise is incorporated in St. Petersburg. Starts out as an exporter of pulp and paper products.

Ilim Pulp acquires a twenty-percent stake in Kotlas Pulp and Paper Mill at a government privatization auction. Soon Ilim Pulp becomes the mill’s largest shareholder and starts acquiring logging businesses to ensure adequate supplies of quality raw materials for Kotlas PPM.

The company opens its first representative office in China in the city of Shenyang, Liaoning province, and delivers its first 50,000 tons of pulp and paper products to the People's Republic.

Renovation of Bratsk Pulp and Containerboard Mill.

A comprehensive distribution system was established both in the domestic and export markets.

Change-over of production of bleached pulp in Kotlas to elemental chlorine-free (ECF) technology (for the first time in Russia).

Beginning of modernization of Ilim Pulp forestry sector by application of modern multifunctional logging machines.

Following Ust-Ilimsk Mill (Irkutsk Oblast) merger with Ilim Pulp, the Company became the largest Russian forest industry corporation with significantly strengthened positions in the global market.

Start of reorganization program — moving from a geography-based management model to management by product lines, and separation of service companies and non-core assets. Approval of a corporate strategy through 2010. Ilim-Gofropak, a start-up enterprise, is put into operation. IlimSeverLes is established on the basis of Kotlas PPM logging operations which comprised twelve logging businesses in the Archangelsk Region and Republic of Komi. Logging enterprise IlimSibLes is established, bringing together structural units that had been part of the Ust-Ilimsk Pulp Mill. Placement of a first RUR1.5 billion corporate bond issue. Ilim Pulp received the first foreign syndicated loan in the industry, as well as a credit from the World Bank for environmental and infrastructure projects on Kotlas Mill.

Launch of the Corporate University, a unified system for talent training and development. Signing of a Social and Economic Partnership Agreement with the Arkhangelsk Oblast.

The company delivered a record 906,000 tons of pulp and paper to the Chinese market, out-performing all other companies worldwide. Ilim Pulp obtains its first FSC certificate. Board of Directors adopts the Key Statements on Corporate Ideology (mission, vision, principles) and corporate policies. End of the corporate conflict.

All pulp and paper assets of Ilim Pulp were consolidated in Ilim Holding S. A. Ilim Group was registered in Russia as a subsidiary of Ilim Holding S. A. The Irkutsk Region’s Government and Ilim Pulp formally execute a Socio-economic Cooperation Agreement. Receivement of the right to mark it’s products in Kotlas with FSC logo. Signing the letter of intent to establish a joint venture with International Paper.

Construction of a corrugated box plant was started. The production facilities of Ilim Pulp Enterprise were converted to a single share on July 01, 2007. Ilim Group Joint Stock Company started its operations.

The new corrugated plant in Leningrad Region with capacity of 140 million m2 of corrugated packaging per year is launched — June the 18th.

Ilim Group launched a state-of-the-art and the world’s largest NSSC plant in Koryazhma.

Board of directors has approved large-scale investment program with unprecedented sum of investments – over 1.4 billion dollars. Prolects on new pulp line in Bratsk and new peper machine in Koryazhma have been approved

Works on two big investment projects - Big Bratsk and Big Koryazhma – have been started

Ilim celebrated its 20th anniversary. The company continues to carry out Big Bratsk and Big Koryazhma projects.

Implementation of the Big Bratsk investment project is completed. In June, Ilim Group officially inaugurated its new pulp mill in Bratsk. The company continues the implementation of its Big Koryazhma investment project. Ilim Group starts production of Russia's first coated freesheet under the Omela brand.

Ilim Group starts production of Russia's first and only premium A+ grade cut-size paper under the Ballet Brilliant brand.

Ramp-up of new production facilities in Bratsk and Koryazhma was completed. Ilim Group celebrated the 50th anniversary of its Bratsk Mill

The Company adopted its strategy through 2030 and business plan through 2020, which implied an increase of the aggregate product output by 500 thousand tons per year. Ilim celebrated 25 years of its continuous operation in the Chinese market. The Company expanded its presence in the Russian CP market and became the principal owner of Gofra Dmitrov LLC. Ilim celebrated the 55th anniversary of the Koryazhma Mill.

Ilim Group celebrated its 25th anniversary and 10th anniversary of the JV with International Paper Ilim Group and Orgkhim holding established Amber Stream LLC, a joint venture to produce innovative biochemical products.

Ilim acquired JSC Sibgiprobum (Irkutsk). Sibgiprobum Engineering and Design Institute specializes in research, development, engineering and design services for the forest, wood processing, and pulp and paper industries. The Big Ust-Ilimsk project was launched on June 21, 2018. By 2022, upon implementation of the project, Ilim will increase production volumes of kraftliner and other packaging materials by 600 thousand tons per year. Ilim is simultaneously upgrading the KLB Line in Bratsk in order to increase its capacity by more than 100 tons per year by 2019. Ilim celebrated the 10th anniversary of the corrugated packaging inclusion in the Company's product range. Since that time this business has been successfully developing. The Company has 2 corrugated box plants in Kommunar (Leningrad Oblast) and in Dmitrov (Moscow Oblast) with an aggregate capacity of 290 million square meters of packaging per year.

Ilim was ranked as the company with the highest level of information transparency among the companies of the Russian forest products sector (according to the rating published by Lesprom.ru, industry-specific media holding). In 2018, the Company’s revenue increased by 40% and amounted to RUB 155.7 billion (vs. RUB 110.4 billion in 2017) and net profit totaled RUB 35.6 billion (vs. RUB 18.9 billion in 2017). Two large contracts for equipment supply for the new KLB Mill were signed as part of the Big Ust-Ilimsk investment project. With an annual output of 600 thousand tons, the KLB machine, custom designed by Voith for Ilim Group, will be the largest in the world in terms of kraftliner (virgin board) production capacity. New RB supplied by ANDRITZ will be equipped with a distributed process control system (including automated control of incineration process) and online control of technological processes, which will ensure enhanced reliability and safety of the manufacturing process. Ilim Group ranked 64th in the annual Forbes rating of the top 200 Russian largest companies, having improved its position by13 points. Among 200 CEO and presidents of corporations, there were thirteen women with Ilim Group CEO Ksenia Sosnina listed among them.

Ilim Group CEO Ksenia Sosnina was named European CEO of the Year (according to Fastmarkets RISI international analytical company) and became the first woman to receive this award. The award was presented at the Fastmarkets RISI European Conference in Lisbon (Portugal). Ilim Group was the first Russian company to receive the Legal Source European certificate. The certificate confirms that Ilim exercises due diligence at all timber sourcing stages and that its products are compliant with all European requirements. The Koryazhma Mill of Ilim Group was recognized as compliant with the relevant requirements of the Russian environmental laws and international conventions and thereby was excluded from the Environmental Hot Spot list of the Barents Region (the list of environmentally-unfriendly facilities drawn up in 2003). The decision to exclude the Koryazhma Mill from the above list was made at the XIV meeting of the Ministers of Environment of the Barents Euro-Arctic Council (BEAC) in February 2020. Ilim signed an agreement with Xiamen C&D corporation, one of its key partners, on pulp and paperboard supply to the provinces in Southwest China via the Silk Road. A new woodroom was placed in service and an environmental project involving construction of a new Evaporation Plant (EVAP 8) with the highest capacity in Russia was completed at the Bratsk Mill of Ilim Group. Built in line with the best available technologies, the new Evaporation Plant 8 is one-of-a-kind facility in the Russian pulp and paper industry. To celebrate the 40th anniversary of the Ust-Ilimsk Mill, the Company published a commemorative book The Making of Ust-Ilimsk. Fortunate to Be Together. The book has become the third in a trilogy commemorating the anniversaries of the production sites of JSC Ilim Group. Ilim published the popular science book for children When I Grow Up, I Will Become an Ecologist , which received the Environmental Education award as part of the Environmental Culture. Peace and Harmony international project (supported by Vernadsky Non-Governmental Environmental Foundation) and won the Environmental Project and Initiative award at the competition for best social projects in Russia.

The book for children about the environment published by Ilim Group was named the winner of the international contest as well as the winner of the competition for best social project in Russia. The book When I Grow Up, I Will Become an Ecologist received the Environmental Education award as part of the Environmental Culture. Peace and Harmony international project and won the Environmental Project and Initiative Award at the competition for best social project in Russia. Ilim Group was named the winner of the international PART Award. The annual international PART Award was presented as part of the 2021 RosUpack Exhibition. Ilim Gofra, Ilim Group’s box plant, was named the best manufacturer in the Marketing Packaging category. Ilim Group topped the list of the largest companies of the Russian forest products sector Forest Industry magazine (Lesprom.com holding) published its annual rating of top 50 largest companies of the Russian forest products sector in 2020 with Ilim Group ranked first. Ilim’s Koryazhma Mill Receives an Integrated Environmental Permit Ilim’s Koryazhma Mill received an integrated environmental permit confirming its compliance with high environmental safety standards Ilim Group celebrates an important anniversary, namely 25 years since the Company started exporting its products to China Ilim Group starts installation of main equipment at its new KLB Mill in Ust-Ilimsk Sibgiprobum Engineering and Design Institute celebrates the 65th anniversary of its operation

In 2022, Ilim Group celebrated its 30-year anniversary. The Company pursued the implementation of its key investment project, Construction of a Pulp and Paperboard Mill (KLB Mill) in Ust-Ilimsk. The Mill facilities were powered in December followed by the successful completion of KLB machine tests with water. The Government of the Russian Federation included the KLB Mill Project in the list of priority investment projects, which facilitated the allocation to the Company of additional timberland to supply wood to the new mill. Ilim Group’s investment in transport infrastructure development in the regions where the Company operates contributed to the upgrade of Kotlas airport and renewal of flights to/from St. Petersburg. In 2022, Ilim Group sponsored the purchase of new medical equipment, including an expert ultrasound machine and some fetal monitors, for the Bratsk perinatal center. JSC Ilim Group became the general partner of the Message to Man, 32nd International Film Festival for the sixth time. The Company was the general partner of Smart Forest, Federal IT Forestry Digitization Forum. The Company published When I Grow Up, I Will Become a Rescuer, a safety book for children, with a circulation of 5,000 copies. It was the third book in the series published with the Company’s support. The Company completed the upgrade of its Industrial Wastewater Biological Treatment Plant at the Koryazhma Mill and cut pollutant discharges as regards the content of suspended solids by up to 200 tons per year thus reducing its footprint in the Vychegda river. Ilim Group signed an agreement for increased paperboard supplies with Xiamen C&D Paper and Pulp, one of the Company’s key partners and the largest service operators in the Chinese market. Ilim Group took part in the Digital Technologies for Arctic Development fair and presented its product for remote wood measurement using a photoscanner based on the Uniform Measurement Center (UMS).

The completion of the commissioning at the KLB Mill in Ust-Ilimsk became the milestone event for Ilim Group in 2023. It is an unprecedented project in the modern Russia in terms of investment, which exceeded USD 1.3 billion. Ilim Group presented its KLB Mill, the largest kraftliner production site in Russia, to its industry peers at RosUpack, the 27th International Exhibition for the Packaging Industry. International Paper withdrew from Ilim Group and sold its share to the Russian partners. As a result of the transaction, control over former joint venture assets was transferred to the Russian shareholders. Ilim Global Timber Rus LLC owned by Zakhar D. Smushkin and Boris G. Zingarevich acquired a 50% interest in Ilim SA (the shareholder of JSC Ilim Group) owned by International Paper. llim Group signed a Strategic Cooperation Agreement for paperboard supply with the key players in the pulp and paper market of China, including Xiamen C&D Paper and Pulp Company; Suifenhe Sandu Papermaking Company; TC International; Jia Hui Trading; Suifenhe Sanxia Economic and Trade Company, and Shanying International Holdings. JSC Ilim Group was the general partner of the Message to Man, 33rd International Film Festival. The Company supported the international festival of documentaries, short fiction and animated feature films for the seventh time and, following its long-standing tradition, it awarded the special prize to a Russian film.

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