The Company sold 661,000 tons of paper during the 1Q 2015 compared to 673,000 tons a year earlier. The Company's average mill selling price of $683 per ton in the 1Q 2015 decreased by $2 per ton compared to the 1Q 2014, due to the stronger U.S. dollar and lower export prices partially offset by higher kraft paper prices.
Operating income of $47 million for the 1Q 2015 decreased by $11 million, or 19%, compared to the 1Q 2014. The lower operating earnings primarily reflects lower productivity, 12,000 tons of lower sales volume, higher fiber costs and compensation costs and the stronger U.S. dollar which impacted prices in Europe and for exports, partially offset by lower planned outage costs.
Interest expense, net, was $6 million for the 1Q 2015, down $3 million from a year ago as a result of a lower borrowings and interest rates. Weighted average interest rate as of March 31, 2015 is 1.8% compared to 2% as of March 31, 2014.
The effective income tax rate for the 1Q 2015 was 34.8% compared to 34.3% for the 1Q 2014.
Roger W. Stone, Chairman and CEO, stated, "KapStone delivered lower 1Q earnings as our mills struggled with some temporary operational issues. Fiber costs were higher, particularly in the Pacific Northwest, and the stronger dollar compared to the Euro negatively impacted our sales in Europe and exports. Once again, the weather affected our operations with almost the same intensity as last year's Polar Vortex as only the timing and geographic locations impacted changed from last year. On the positive side, our corrugated products performed very well and shipments were up 6.5% on an average weekly basis over the 1Q 2014."
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.
