updated 4/22/2005 8:36:10 AM ET 2005-04-22T12:36:10

Forest products company International Paper Co. on Friday said earnings rose more than 5 percent for the first quarter as the company took in higher prices for its products in North America.

Net income rose to $77 million, or 16 cents per share, from $73 million, or 15 cents per share, a year earlier. Excluding charges related to estimated losses on businesses held for sale, a write-off of goodwill and debt retirement totaling 18 cents per share, International Paper earned 34 cents for the latest quarter. The year-ago net income excluding items was 12 cents per share.

The company also benefited from a lower tax rate in the latest quarter. The effective tax rate was 24 percent, compared with 33 percent in the 2004 period. The rate for the 2005 quarter reflects the favorable resolution of a tax matter that reduced the company’s tax provision by $19 million, or 4 cents per share.

Sales rose to $6.6 billion from $6.1 billion, marking the highest first-quarter level in four years. The company said the increase was mostly due to better pricing across its businesses in North America.

Analysts were expecting the company to post earnings of 30 cents, excluding items, with revenue totaling $6.57 billion.

Forest products was the company’s best-performing segment, posting operating profit of $207 million, up from $176 million, as a result of stronger sales volumes and improved average prices for wood products.

Higher raw materials costs dampened results at the company’s printing papers divisions, while slowed production at certain mills resulted in a drop in operating income at the company’s consumer packaging business.

The company said it expects the second quarter “to be somewhat seasonally stronger than the first,” although raw materials costs are still seen crimping profit margins.

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