WRAPUP 2-IP shares drop after earnings disappoint

* IP adj Q2 EPS 42 cents vs Street view 41 cents

* IP shares drop 7 pct

* Silgan Q2 EPS 48 cents vs Street view 46 cents

* MeadWestvaco Q2 EPS 35 cents vs Street view 33 cents (Recasts, adds analyst comment, updates stock prices)

By Ernest Scheyder

NEW YORK, July 28 (Reuters) - International Paper Co's (IP.N) quarterly profit failed to impress Wall Street on Wednesday, especially when contrasted with recent results from rival Packaging Corp (PKG.N), sending its shares down 7 percent.

IP's earnings narrowly beat expectations, while revenue slightly missed. For many, the results were not good enough; investors looked for even stronger profit from one of the world's largest pulp and packaging producers as the economy rebounds.

The results came the same day smaller rivals MeadWestvaco Corp (MWV.N) and Silgan Holdings Inc (SLGN.O) posted better-than-expected earnings.

(For a graphic on the packaging companies' earnings, see link.reuters.com/haq99m.)

Last week Packaging Corp posted quarterly earnings of 37 cents per share, well above the 31 cents analysts had expected, according to Thomson Reuters I/B/E/S.

IP's adjusted earnings of 42 cents a share beat expectations by only a penny.

"I thought IP's earning were pretty reasonable, but we were expecting higher EPS of 50 cents," RBC Capital Markets analyst Paul Quinn said. "It's kind of a disappointment, though I thought the effect on the stock would be neutral."

Shares of IP fell $1.78, or 7 percent, to $23.71 in midday trading. The stock has traded between $17.77 and $29.25 in the past 52 weeks.

For its second quarter, IP posted net income of $93 million, or 21 cents per share, down from $136 million, or 32 cents per share, a year earlier.

Excluding restructuring charges and other one-time items, profit was 42 cents per share. By that measure, analysts had expected 41 cents.

Sales at the Memphis, Tennessee-based company rose 5.5 percent to $6.12 billion. Analysts had expected $6.19 billion.

IP's year-earlier figures included the so-called black liquor credit, which was originally intended for the transportation sector. By mixing diesel with biomass, which IP already used to produce power, IP secured $1.4 billion in credits from the federal government in 2009.

The credit expired at the end of 2009. A replacement measure making its way through the U.S. Congress would deny the credit to paper makers. Analysts had factored the credit expiration into their models. [ID:nN2849347] [ID:nN21231665]

International Paper, which processes pulp and makes industrial and consumer packaging, said sales increased in nearly all its segments in the second quarter.

In a positive sign for the broader economy, the company said volume rose at its consumer packaging unit.

"I personally think IP's got a great back half of the year and should be very strong," RBC's Quinn said.

Rival UPM-Kymmene Corp (UPM1V.HE), based in Finland, is due to post its results on Aug. 3.

SMALLER RIVALS

MeadWestvaco benefited from strong results at its packaging units and specialty chemicals segments.

Shares of the Glen Allen, Virginia-based company fell 14 cents to $24.62.

"Our outlook for the third quarter is cautiously optimistic," Chief Financial Officer E. Mark Rajkowski said on a conference call with investors. "We believe that the improved demand trends across our targeted businesses and markets will remain stable, at least in short term."

MeadWestvaco said net income fell to $50 million, or 29 cents per share, from $125 million, or 72 cents per share.

Excluding restructuring charges, earnings were 35 cents a share, 2 cents higher than analysts' average forecast.

Sales rose 8 percent to $1.55 billion but fell short of estimates of $1.57 billion.

Silgan was helped by sales of closure materials, which seal metal cans.

The Stamford, Connecticut-based company reported net income of $36.3 million, or 47 cents per share, up from $34.8 million, or 45 cents per share, a year earlier.

Excluding one-time items, the company earned 48 cents per share. Analysts had expected 46 cents.

R.W. Baird analyst Ghansham Panjabi said Silgan's results amount to a "net neutral" for the company's stock as the strength of the closures business offset high resin costs.

Silgan shares fell 65 cents, or 2.2 percent, to $29.20.

Of concern, Panjabi said, is the fact that Silgan has yet to buy back stock, despite having authorized a "massive" buyback program in the second quarter.

Its quarterly sales rose about 1 percent to $693.9 million, but missed estimates of $699 million.

The company affirmed its full-year outlook and forecast third-quarter profit of 85 cents to 95 cents per share. Analysts expect 96 cents. (Reporting by Ernest Scheyder and Adveith Nair, editing by Lisa Von Ahn and John Wallace)