IP to transform paper business portfolio
Aug 4, 2005 5:37 PM
International Paper (Stamford, CT) has announced a three-part transformation plan to transform its business. IP will narrowing its portfolio to two key platform businesses, realign mills in those businesses and explore options to sell other businesses. The company announced its two key businesses will be uncoated papers and industrial and consumer packaging.
Chairman and CEO John Faraci says, “We already have a strong global position in uncoated paper and have a growing worldwide platform in packaging. Our portfolio changes will allow us to better focus management attention and financial resources on these key businesses, which represent over 70 percent of our sales, and can achieve both cost-of-capital returns and profitable growth.”
IP plans to evaluate strategic options for its other businesses, including the potential sale of: its 50.5 percent stake in Carter Holt Harvey; the Coated and Supercalendered (SC) Papers Business, including the coated groundwood mill and associated assets in Parana, Brazil; the Beverage Packaging Business, including the Pine Bluff, AK, mill; the Kraft Papers Business, including the Roanoke Rapids, NC, mill; Arizona Chemical; segments or potentially all of its 6.8 million acres of U.S. forestlands; and the Wood Products Business. In Brazil, IP plans to retain 1.2 million acres of forestlands after the sale of the Inpacel-related forests, and to retain harvesting rights on the 850,000 acres it currently holds in Russia.
The businesses to be evaluated represent approximately 30 percent of IP’s 2004 sales (including intercompany sales) and $925 million, or 40 percent, of operating profits. The company expects to complete the evaluation by the first quarter of 2006.
“Considering our desire to develop strong businesses that can compete and grow globally, we have made choices about which businesses to focus our management and financial resources,” says Faraci. “The businesses being evaluated for potential sale or spin-off are good businesses that may be better positioned with different ownership.”
IP is the world leader in uncoated paper with 6.6 million tons of capacity in the United States, Brazil and Europe, and 2004 sales of approximately $5.8 billion. With 14 mills around the world, IP manufactures a variety of grades including cut-size paper, offset paper, envelope paper, forms, bristols, specialty paper, and market and fluff pulp. Its major U.S. brands include Hammermill, Jet Print Photo, Postmark and Carolina.
IP’s distribution business, xpedx, will continue to provide supply chain management and focus on commercial printing, publishing, packaging, facility supplies and redistribution.
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