KapStone Paper and Packaging Corporation's consolidated net sales of $777 million in the 3Q 2016 were $31 million, or 4% lower than $808 million for the 2015 third quarter. This decrease was due to $31 million of lower prices and a less favorable mix in the paper and packaging segment.
Operating income of $55 million for the 3Q 2016 decreased by $7 million, or 11%, compared to the 3Q 2015. The lower operating earnings primarily reflect lower prices for domestic and export containerboard and export kraft paper prices, and a less favorable product mix. These factors were partially offset by lower fiber and fuel costs, lower management incentives, and costs due to the 2015 work stoppage at the Longview mill.
The effective income tax rate for the 3Q 2016 was 28.9% compared to 32.5% for the 3Q 2015. The 3Q 2016 effective income tax rate includes a favorable discrete tax adjustment reflecting higher energy tax credits.
Roger W. Stone, Chairman and CEO, stated, "KapStone's operations performed well in the 3Q with our mills producing 700,000 tons of paper. Net earnings, however, were lower year-over-year primarily reflecting lower prices and a less favorable product mix. In the 3Q 2016, we announced price increases on domestic containerboard, corrugated products, and extensible grade export kraft paper. We estimate that these increases should be fully implemented by the end of the 1Q 2017, providing substantial benefits to KapStone.
KapStone Paper and Packaging Corporation is the fifth largest producer of containerboard and corrugated packaging products and is the largest kraft paper producer in the United States.
