SCOTT PAPER <SPP> SEES IMPROVED EARNINGS
Scott Paper Co, one of the leaders in
the tissue and coated paper business, said it expects 1987
earnings to be between 5.75 dlrs and 6.25 dlrs a share, within
the range proscribed by most Wall Street analysts.
    "We have put together five or six years of pretty
respectable growth and three consecutive years of record
earnings and I see no reason why this growth pattern should be
interrupted," Scott's chairman and chief executive officer
Philip Lippincott told Reuters in an interview.
    Last year, the company reported earnings of 4.96 dlrs a
share, reflecting the impact of a a strike at its Mobile,
Alabama, plant.
    Earlier today, Lippincott outlined his bullish growth
scenario for analysts, emphasizing that the company is dealing
with the growing capacity in the industry by developing new
products and modernizing plants. He said that capacity
increases in the industry, particularly tissue paper, have
stymied price hikes but Scott has boosted sales by providing
more distinctive products that meet the needs of consumers.
    "Scott Paper has shown tremendous growth in the last five
years, but I think that improvement is largely unappreciated by
the market," said analyst Sherman Chao of Salomon Brothers who
noted that the stock is selling at a relatively low
price/earnings ratio.
    "They have been striving for a return on equity of 14 to 17
pct, but today they were talking about a much higher objective.
They are raising their financial objectives," Chao said.
    Sales of consumer products increased about four pct last
year and showed growth of about five pct pace in the first
quarter, eclipsing the overall industry wide sales pace of less
than two pct, Lippincott said.
    "The most favorable thing I came away with today is that
their Sommerset, Maine, plant which makes number four coated
paper, is sold out through September. That means their coated
paper business is looking particularly good," said Lawrence
Ross of PaineWebber Group Inc.
   
    Analyst George Adler of Smith Barney was equally
optimistic. "They don't have anything that is going to set the
world on fire right now but I am at a loss to find anything
negative either," Adler said.
    He said Scott Paper is continuing to gain market share by
emphasizing their strategy and developing distinctive products.
    Lippincott also noted that the company stands to gain from
the depressed level of the dollar. "The bottom line impact of a
lower dollar was about 15 cts a share in 1986, and we could
have a similar impact this year," he said.
 Reuter
