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Georgia-Pacific Reports $187 Million Fourth Quarter Loss

Monday, January 29, 2001

Press release from the issuing company

ATLANTA, Georgia. January 26, 2001 -- Georgia-Pacific Group (NYSE:GP) today reported a net loss of $187 million (98 cents diluted loss per share) for the three months ended Dec. 30, 2000, compared with net income of $175 million ($1 diluted earnings per share) for fourth quarter 1999. Fourth quarter results were negatively impacted by one-time unusual charges and poor market conditions that necessitated production downtime across the company’s businesses. For the quarter, the company incurred one-time unusual after-tax charges of $184 million (96 cents diluted loss per share) resulting primarily from a write-down of the Georgia-Pacific Tissue assets and closure of a paper mill at Kalamazoo, Mich. Excluding unusual charges, Georgia-Pacific Group, the manufacturing and distribution business of Georgia-Pacific Corp., recorded a net loss of $3 million (2 cents diluted loss per share) for fourth quarter 2000. The results also include the impact of the purchase of Fort James Corp. and related interest on acquisition debt that reduced net income by $23 million (12 cents per share). Georgia-Pacific Group’s net income for the full year 2000 was $343 million ($1.94 diluted earnings per share) versus net income of $716 million ($4.07 diluted earnings per share) a year ago. Excluding unusual items, net income was $512 million ($2.89 diluted earnings per share). Within Georgia-Pacific Group’s pulp and paper businesses, the containerboard and packaging segment reported operating profits of $99 million for the fourth quarter 2000 versus fourth quarter 1999 operating profits of $130 million. The group’s consumer products segment, consisting of its retail and away-from-home tissue businesses previously included in the group’s former pulp and paper segment, recorded an operating profit of $64 million, excluding a pre-tax loss of $204 million for the write-down of assets of the Georgia-Pacific Tissue away-from-home tissue business that will be sold during first quarter 2001. This compares with an operating profit of $57 million in the same period of 1999. Correll said, "Demand for our products fell rapidly during the fourth quarter, especially in December, and manufacturing facilities within our system took significant downtime. For example, we curtailed gypsum production by approximately 34 percent, lumber production by approximately 20 percent and containerboard production by about 9 percent, the equivalent of 88,000 tons. We also closed a non-competitive, white paper mill that produced approximately 140,000 tons annually. "The erosion in building products prices continued during the quarter. When comparing the full year of 2000 with the full year of 1999, average selling prices were down between 12 and 18 percent in oriented strand board, plywood, gypsum wallboard and softwood lumber. "In addition, higher energy costs, especially among our Western facilities, impacted profitability even further. "Looking ahead, we expect market conditions to remain depressed in nearly all our businesses with the exception of consumer products, which we believe will weather the current economic downturn. This reinforces our view that the expansion of our consumer products business will be an effective counterbalance to the cyclical nature of other parts of our asset base. We are optimistic about this segment as we strengthen our existing consumer tissue brands, bring new products to market and continue to achieve efficiencies between Georgia-Pacific and the former Fort James operations. "Despite our disappointing fourth quarter results, we believe 2000 was a watershed year for Georgia-Pacific because of the dramatic steps we took to transform our company to compete in higher value segments. The impending divestiture of Georgia-Pacific Tissue, the proposed merger of The Timber Company with Plum Creek Timber Co. and sales of other targeted businesses will move us even closer toward our desired business portfolio and capital structure.

 

 

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