Georgia-Pacific Reports 3Q Results: Sales Up, Profits Down
Friday, October 19, 2001
ATLANTA, Oct. 18 -- Georgia-Pacific Corp. today reported third quarter 2001 income from continuing operations of $81 million (35 cents diluted earnings per share), before a one-time loss, compared with income from continuing operations of $130 million (76 cents diluted earnings per share) during the same period last year. The company incurred a one-time $68 million pre-tax loss ($263 million after tax loss, or $1.15 diluted loss per share) on the sale of a portion of its pulp and paper facilities to Domtar Inc. for $1.65 billion, resulting in a third quarter 2001 loss from continuing operations of $182 million (80 cents diluted loss per share). Total sales for Georgia-Pacific in the third quarter 2001 were $6.3 billion compared with $5.4 billion in the third quarter 2000 and $6.6 billion in the second quarter 2001. Earnings before income taxes, depreciation and amortization (EBITDA) were $777 million. Debt for Georgia-Pacific was reduced to $13.1 billion by the third quarter's end, compared with $15 billion at the end of the second quarter 2001. The consumer products segment recorded an operating profit of $264 million versus $55 million in the same period last year and $212 million in the second quarter 2001. Georgia-Pacific's consumer products segment includes its retail and away-from-home tissue businesses in North America and Europe, and the Dixie disposable tableware business in North America. Georgia-Pacific's building products segment recorded a third quarter operating profit of $99 million compared with $43 million in the third quarter 2000. Operating profits were $69 million in the second quarter 2001, including a one-time charge of $67 million for plant closures and indefinite curtailments in the gypsum wallboard business. The containerboard and packaging segment reported an operating profit of $102 million in the third quarter 2001 versus $141 million in the third quarter 2000. In the second quarter 2001, the segment recorded operating profits of $103 million. Excluding the loss on the sale of assets to Domtar, the bleached pulp and paper segment recorded operating profits of $11 million compared with $170 million during the third quarter last year. This segment, which includes Georgia-Pacific's pulp and communication papers businesses and its Unisource paper distribution business, had operating profits of $39 million in the second quarter 2001. For the year to date, Georgia-Pacific reported a loss from continuing operations of $289 million ($1.27 diluted loss per share) versus income from continuing operations of $530 million ($3.07 diluted earnings per share) in 2000. "Our consumer products business led the way again last quarter. Demand for consumer bath tissue, paper towels and napkins has remained relatively steady despite weakening economic conditions,'' said A. D. "Pete'' Correll, chairman and chief executive officer of Georgia-Pacific. "Conversely, demand for our away-from-home tissue products softened during September, mirroring general declines in travel and dining out, but those declines were more than offset by business synergies, and lower fiber and energy costs. "Despite somewhat slower demand in our building products segment, operating profits were up from a year ago. Prices for structural panels peaked early in the quarter and then retreated. Profitability in our gypsum business improved in the third quarter, demonstrating that the production curtailments and plant closures we announced in June are making a difference. "Operating profits in our containerboard and packaging business were down from a year ago, but were flat compared with second quarter 2001,'' Correll continued. "Although prices were lower for linerboard, medium and finished boxes, our ongoing focus on cost efficiency helped us maintain profitability. "Operating results in the bleached pulp and paper segment were dramatically lower compared with last year following the sale of approximately half of our white paper capacity to Domtar. We continued to streamline our remaining white paper business by retiring 140,000 tons of commodity and specialty paper production capacity at the Camas, Wash., mill to better focus on higher-growth, cut-size office papers. "Going forward, deteriorating domestic economic conditions as well as international political strife can be expected to continue negatively impacting our containerboard and packaging business, as well as our white paper business and both of our distribution businesses. "We anticipate demand in the building products segment continuing to decline during the fourth quarter. As a result, we are not optimistic about prospects for improved prices in our structural panels or lumber businesses. We have already taken downtime at several plywood plants and sawmills this quarter. "Our consumer products business remains strong. We continue to benefit from synergies from the Fort James merger. However, weaker economic conditions and seasonal factors will likely lead to lower operating profits for this segment as well. "In these uncertain market conditions, Georgia-Pacific will continue to closely monitor inventories and curtail production where needed to match demand. We continue to reduce costs and capital spending. "In the 11 months since our acquisition of Fort James, we have successfully executed many of the key steps necessary to focus ourselves on value-added forest products and we are ahead of our debt reduction target. We will continue to drive toward these goals with the utmost urgency,'' Correll concluded. During October, Georgia-Pacific completed the previously announced merger of The Timber Company with Plum Creek Timber Co. Inc. Timber Company shareholders received 1.37 shares of Plum Creek stock for each share of Timber Company common stock. More information on the transaction is available at www.plumcreek.com .