A spokeswoman said the majority of the cuts would affect IPs US operations, but European operations, which are already applying their own cost reductions, could also be affected.

The spokeswoman said the cuts were in light of current tough market conditions and economic climate, and were in a bid to improve the companys profitability.

Some 450 jobs will go at the groups headquarters in Memphis.

IP chairman and chief executive John Dillon is also to retire after 38 years with the company, and will be replaced by John Faraci, who is currently IPs president. Dillon will step down from 31 October.

Current vice-president Rob Amen will succeed Faraci as president from 1 November.

Dillon became a director of IP in 1991, was named chief operating officer in 1995, and took on the roles of chairman and chief executive in 1996.

Faraci has been IPs president since February, and was previously executive vice-president and chief financial officer. He joined in 1974 as financial analyst.