Georgia-Pacific Invests in Consumer Towel & Tissue Business

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Georgia-Pacific (Atlanta, Georgia) (NYSE: GP) is moving forward with capital investments in its towel and tissue sector of its consumer products business. Earlier this year, G-P's board approved a strategy that involved separating the company into two public entities: a consumer products and packaging company and a building products and distribution company. However, current conditions for new stock offerings will not allow the company to raise an anticipated $1.5 billion in capital or 15%-20% of the new company. The $12 billion consumer products and packaging company will consist of Georgia-Pacific's $7 billion consumer products business, $2.5 billion packaging business and $2.3 billion pulp and paper businesses. G-P has embarked on a multi-year capital investment worth nearly $400 million in its tissue and towel manufacturing plants that will strengthen the position of its consumer products business.

The strength of G-P's consumer products group, particularly, the tissue and towel sector was built on strategic acquisitions and focused investments in the company's manufacturing facilities.

Georgia-Pacific cemented its position as the world's largest producer of tissue and towel products when it completed the buyout of Fort James Corp (a merger of Fort Howard Corp and James River Corp) in 2000.

The company recently approved a $200 million investment for a new thru-air-dried machine and towel and tissue converting equipment in the northwest. In Louisiana, a $125 million tissue paper machine is scheduled to come online at the end of 2002. A $30-40 million project for additional tissue and towel converting equipment is planned for the same site. The company's mill in Palatka, Florida is expanding its towel converting facilities.

For the second quarter of 2002, the company's consumer products segment recorded an operating profit of $279 million compared to an operating profit of $214 million for second quarter last year. It's towel and tissue sector brands include Quilted Northern, Brawny, Dixie, Vanity Fair, Angel Soft, Sparkle, Mardi Gras and Soft 'n Gentle.

Georgia-Pacific is one of the world's leading manufacturers and distributors of tissue, packaging, paper, building products, pulp and related chemicals. With annual sales of more than $25 billion, the company has 600 locations in North America and Europe. Georgia-Pacific's building products distribution segment has long been among the nation's leading wholesale suppliers of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers.