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International Paper CEO John Faraci on the company’s acquisition of Temple-Inland and its acquisitions and growth in emerging markets.
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Did ask yourself something are you using less Paper than say you did ten years ago.
Well some of you actually are but that's not stopping International Paper from profiting look at shares the stock.
-- the shares are up more than 20%.
Year over year.
The company is expanding operations and focusing on fluff to fuel future financial success look at the -- in a minute but.
-- just over the past six months the stock is up 41%.
With the price to earnings ratio of nine -- a dividend coming through let's get to the real story of Fox Business exposed to the -- I think he's chairman and CEO of inter national Paper region here.
It -- good to be here well.
-- a minute but.
Listen first congratulations -- Department of Justice put their signed sealed and delivered stamp of approval on the temple in England acquisition.
Let's talk about that specifically what does temple -- -- do specifically for your company.
Well temple and gives a great opportunity to take an already successful industrial packaging business we had to make it a great one.
It's going to be good for customers good for employees and -- for our shareholders he took on more debt with that you've already had about nine billion but you're taken on about 700 million in debt from Temple-Inland the question and we just heard from Caroline of course our our previous fund manager.
Everyone likes he's dividend stories and you reported a 25 cent quarterly dividend rate but with all that debt.
Does that put that dividend in pero no doesn't is really were also getting a lot more earnings and so.
You know we're gonna pay down some debt we took on.
A couple million dollars of debt to do the acquisition but you know we've got a very international it's a cash flow story got plenty of cash to repay our debt and -- dividend and we think we gets -- there and run like.
When two companies come together.
People who work there think.
Layoffs are you laying off people or are you hiring people will be some overlap no question about it is temples in the same business that -- -- but fundamentally we bought the business -- -- -- she's temples -- any good people that got good assets have been good customers.
We're excited about getting work part of this acquisition entailed the department of justice and we'll let you do it if you divest other three of Temple-Inland seven plants sure.
Government regulation.
They say is there to protect the customers so that there isn't a lock on the business but.
To hurt your chances of really turning this into your biggest dream and that -- to be a gigantic powerhouse or not not at all not at all -- -- voice to what her.
We knew there was going to be a second request all along we thought to be good possibility of some -- and -- being acquired and fundamentally.
In the economics of transactions still really solid for us and our share owners who were really excited about templates we're now on week two.
Does the government make your life more difficult or do you just ignore it at this point to try and make the best for your shareholders.
Well good I'm offer for less government regulation I think I'm more certain view be good thing but at the end of the day you know we're not dependent on the government for the businesses -- -- He had a -- -- get better and get worse and we can't use the governance is -- One of the the best things about a business that become successful is when it becomes very -- you can switch things around.
And you know here you see your cash cost components and you do everything that everything that you spend on etc.
but.
When you have a plant that is making one thing flight.
Basically what we call on coated free sheet -- that sun coated free sheet which we all use.
How do you flip that over because that's what you're doing your read purpose and a plant to do something -- all fluff pulp.
Well this is a great opportunity to really reposition the facility -- -- you say will we couldn't continue to run because of declining demand.
From -- -- US.
We've got a growing fluff pulp business in the first of all what -- what is output is up follow up hopes he is -- -- hygiene products it's highly observances use in baby diapers feminine hygiene products.
It's a growing market around the world particularly outside North America.
And our customer base is concentrated outside North America so we've we looked at -- -- -- good assets your good people.
I here's a good would basket you know here's an opportunity to reposition not all the facility but part of it into a growing product -- finish.
And -- hiring 200 people break that started up again and that's -- -- a 100% of will be export.
India what an interest in -- to see that just does the US market is scaling back on their.
Under coated Paper use that India is behind in that regard they're going ahead and using a lot of this -- up acquired an Indian company -- for -- And what else any more acquisitions and -- you Citi just got back from Russia.
Well we've got a lot going on -- billion dollar capital program in our joint venture is expanding pulp production for the Chinese market and Paper production for the growing Russian market.
India we're really excited about that -- the first non US company to invest in India Paper markets probably gonna double there over the next five to seven years.
And we've got a great opportunity to really make that -- significant platform for International Paper.
As a -- you know their tough times and there are great moments.
-- -- what is important for you to sort of in part to a shareholder about International Paper.
International -- cash flow story.
And I think we're proving to investors we can generate cash and I think we're also from new investors we can take our cash increased share -- -- value from it.
Part of that is giving cash back -- strictly through dividends and part of it is intelligently selectively re investing to make International Paper stronger and better.
Figure in the game -- would and -- could pay.
Paper tiger but it a good way -- that's it could put good description but I thought it was clever John great to see if -- -- this fresh off the full acquisition of Temple-Inland that.
John Faraci of International Paper come -- with us exclusive.
