G-P swings back to profit

ATLANTA – Paper products company Georgia-Pacific Corp. reported earnings Thursday that far exceeded expectations, with strong results from packaging and building materials sales.

Georgia-Pacific bounced back from a loss in the same period last year, posting profits of $62 million in the second quarter, or 25 cents per share, compared with a loss of $83 million, or 36 cents a share, in the year-ago period.

The results were well ahead of the 14 cents per share that analysts surveyed by Thomson First Call had been expecting.

By cutting costs and becoming more efficient, Atlanta-based Georgia-Pacific has been able to combat weak demand and tough competition, A.D. “Pete” Correll, the company’s chief executive, said in a prepared statement.

“As we noted in the first quarter of this year, we are emphasizing cost control across our company and are slightly ahead of plan with our previously announced overhead reduction goals,” he said.

Georgia-Pacific’s packaging segment had operating profits of $100 million, including an $18 million gain from asset sales. That compares with profits of $94 million in the same quarter last year.

The company’s building products distribution division reported profits of $21 million, compared with $16 million in the same quarter a year ago.

“They’re just doing more with less, increasing efficiency – the same thing every company is being asked to do,” said Steven Chercover, an analyst with D.A. Davidson. “What they’re doing is taking control of things which are in their grasp.”

Sales fell 19 percent to $5.04 billion from $6.22 billion. The company said the decline reflected the sale of its majority interest in the Unisource Worldwide paper distribution business, which contributed to sales in the year-ago period.

Profits for the first six months of the year were $34 million, or 14 cents a share, compared with a loss of $567 million, or $2.47 a share, in 2002. Sales were $9.62 billion compared with $12.02 billion.

Asbestos liability costs through the second quarter were in line with projections, but the number of new claims filed against Georgia-Pacific was higher than projected.

The company’s shares were up 18 cents to $18.87 on the New York Stock Exchange.