Displaying items by tag: Resolute Forest Products

abiti122011Resolute Forest Products Inc. reported a net loss of $2 million for the year ended December 31, 2012, or $0.02 per share, on sales of $4.5 billion. This compares with net income of $41 million, or $0.42 per diluted share, on sales of $4.8 billion in the year ended December 31, 2011. Net loss in the fourth quarter of 2012 was $36 million, or $0.38 per share, on sales of $1.1 billion, compared with a net loss of $6 million, or $0.06 per share, on sales of $1.1 billion in the fourth quarter of 2011.

Excluding $81 million of special items, net income for the full year was $79 million, or $0.81 per diluted share. Excluding special items of $70 million, net income in the fourth quarter was $34 million, or $0.35 per diluted share. For the full year 2011, net income excluding special items was $166 million, or $1.71 per diluted share, and $45 million, or $0.46 per diluted share, in the fourth quarter 2011. All special items and non-GAAP financial measures, such as adjustments for special items and adjusted EBITDA, are described and reconciled below.

"We significantly improved the Company's competitiveness by optimizing our asset base, reducing costs wherever possible and strengthening our financial position this year," said Richard Garneau, president and chief executive officer. "We added pulp assets, committed to growth projects in lumber, invested in power cogeneration plants and further optimized our paper assets, steps that will position us well for the future. At the same time, we returned $67 million to our shareholders in share buybacks, reduced balance sheet working capital by a further $81 million from the end of 2011 and redeemed an additional $85 million of debt."

Operating Income Variance

The Company recorded an operating loss of $30 million in 2012, compared to operating income of $198 million in 2011. This reflects a $134 million increase in closure costs, impairment and other related charges, and $173 million of lower volume, in both cases because of additional market downtime and the Company's ongoing efforts to focus production in its most cost-effective mills and drive better efficiency by restructuring and reducing labor costs. As a result, and in addition to lower energy, recovered paper and fiber costs, manufacturing costs improved by $55 million, excluding the effects of lower volume. The effect of pricing changes in the year was neutral as the increase in lumber pricing offset declines in pulp, while gains in specialty paper offset declines in newsprint and coated papers.

In the fourth quarter, the Company recorded an operating loss of $46 million, compared to operating income of $26 million in the third. This reflects $82 million in closure costs, impairment and other related charges, mainly related to the idling of a pulp mill and specialty paper machine in Fort Frances, Ontario, the closure of a specialty paper machine in Laurentide, Quebec, and costs related to the sale of assets in Mersey, Nova Scotia. The variance also included the unfavorable effects of a $10 million non-cash inventory obsolescence charge for slow-moving spare parts, $10 million unfavorable pricing and $8 million due to lower volume. The Company's asset optimization and restructuring initiatives, as well as more favorable pricing for recovered paper, maintenance timing and a favorable wood products inventory adjustment, led to savings of $25 million in overall manufacturing costs, excluding the effects of lower volume.

SEGMENT DETAILS

Newsprint

The newsprint segment generated operating income of $18 million in the fourth quarter, an $8 million decrease from the third. Average transaction price slipped $6 per metric ton and shipments fell 2% as a result of newsprint export markets pressured by the strong U.S. dollar. There was a $4 million non-cash provision for spare parts obsolescence recorded against operating income in the quarter, but it was offset by lower manufacturing costs and favorable recovered paper pricing.

An 11% reduction in operating costs led to a 9% increase in operating income for the year, to $97 million, despite a 10% reduction in shipments and a 1% decrease in average transaction price. The Company reduced shipments as part of its efforts to manage its exposure to markets affected by the strong U.S. dollar and its steps to optimize its asset base, including the closure and subsequent sale of its interest in the Mersey newsprint mill.

Coated Papers

Operating income in the coated papers segment was unchanged in the fourth quarter compared to the third, at $3 million. Average transaction price rose $18 per short ton, or 2%, but shipments were down 14% as a result of equipment failures, which pushed operating costs per unit up 3%.

Operating income in the coated papers segment was down $48 million in 2012, to $9 million, as a result of a 3% reduction in average transaction price and a 13% reduction in shipments. The Company continued to make progress in its efforts to improve equipment efficiency with a smaller labor force, but operating costs per unit rose by 6% in the year, as the Catawba, South Carolina, mill continues to work toward capturing the expected efficiencies.

Specialty Papers

The specialty papers segment generated operating income of $8 million in the fourth quarter, an $18 million decrease from the previous quarter.  Average transaction price was stable but shipments dropped 3% on lower demand. The decrease in operating income includes $4 million in additional costs associated with the Dolbeau, Quebec, facility's ramp-up and a $3 million non-cash provision for spare parts obsolescence.

The restart of the Dolbeau facility is another step in the Company's strategy to optimize its asset base; in the last five quarters, three specialty paper machines, one in each of Laurentide, Fort Frances and Kenogami, Quebec, were closed or idled, and the Company continued its labor restructuring initiatives, most recently in Alma, Quebec. Despite a 16% drop in shipments, consistent with the industry average, operating income rose 23% from 2011 to 2012, to $76 million, as average transaction price increased 3% and the Company improved manufacturing costs, including a $7 million improvement in labor costs and $14 million of favorable power and steam costs.

Market Pulp

Operating income was breakeven in the quarter, a $22 million improvement over the third. Average transaction price dropped $23 per metric ton, or 3%, from its already low levels in the third quarter. Despite indefinitely idling the Fort Frances pulp mill in late November, shipments rose 8% as the Company ran Fibrek's Saint-Felicien, Quebec, facility throughout the quarter, except for four days of downtime to complete the dredging of many years of accumulated sludge in the lagoons. Manufacturing costs improved by $18 million as there was no major maintenance in the quarter.

Operating income in 2012 was $135 million lower than in 2011, reflecting primarily the $82 per metric ton drop in average transaction price (which includes, as of May 2012, the three Fibrek mills), but also an increase of $21million in operating costs on higher chemicals, maintenance and labor costs. The five-week outage at Saint-Felicien had a $16 million negative impact on operating income.

Wood Products

The wood products segment reported operating income of $14 million in the fourth quarter, $8 million higher than the third. Average transaction price was unchanged but shipments rose 1%. There was a $7 million favorable inventory adjustment as a result of increasing market prices for lumber products.

As a result of stronger market conditions and gradually improving North American housing starts, operating income increased $51 million in the year, to $26 million, and average transaction price rose $53 per thousand board feet, or 18%. Shipments were down 9% as a result of the closure of the Oakhill sawmill in Nova Scotia and downtime in Quebec sawmills. Manufacturingcosts rose $16 million mainly because of higher stumpage fees in Quebec, which is tied to lumber pricing.

CORPORATE & FINANCE

The Company used cash on hand to repurchase 1,946,205 shares of common stock during the fourth quarter under its previously announced share repurchase program, at a total cost of $22 million, and to redeem $85 million of its 10.25% senior secured notes due 2018. With $263 million of cash, the Company ended the quarter with $782 million of available liquidity, and $271 million in net debt.

OUTLOOK

Mr. Garneau added: "combined with softening demand and lower exports from North America, recent capacity restarts by competitors are putting pressure on pricing in newsprint and supercalender grades. We have focused our paper production in our most productive sites and drove better efficiency by restructuring mills and reducing labor costs. This gives us confidence in the competitiveness of our improved asset base as we face the challenges ahead. We expect to benefit in 2013 from investments in power cogeneration assets, with Saint-Felicien and Dolbeau now fully operational and Thunder Bay expected to come online by the end of the first quarter. Recent demand and pricing trends are giving us reason for cautious optimism that the pulp market is gradually coming out of its prolonged slump. Wood products should continue to show progress as housing starts build on recent improvements. Our ongoing growth projects - the capacity enhancement in Thunder Bay, in addition to the announced restart of the Ignace sawmill and construction of the new Atikokan sawmill to be completed in 2014 - further enhance our position in the lumber segment for the future." 

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SOURCE: Resolute Forest Products Inc.

Published in Financial News

abiti122011Resolute Forest Products (NYSE: RFP) (TSX: RFP) today announced the construction of a new sawmill in the area of Atikokan, Ontario. This investment reflects Resolute's ongoing commitment to the solid wood business and will provide significant economic opportunities for First Nations in the region.

The Atikokan project will involve the construction of a single line random length (16 ft) sawmill with an annual capacity of 150 million board feet. Approximately 90 people will be directly employed by the operation, and additional indirect positions will be created for hauling finished lumber and residual chips. Final site selection in the Atikokan area will be completed in the next few weeks, and construction is anticipated to begin in the spring, with completion targeted for early 2014. The capital cost of the project is estimated at C$50 million.

"We believe in our solid wood business and we're taking action to grow and improve it. The new random length sawmill will complement our existing lumber product mix in Ontario and will allow Resolute to improve its product offering to customers in central Canada and key markets in the United States," stated Richard Garneau, President and Chief Executive Officer. "We are particularly excited about the active involvement of First Nations in the project and the opportunity for shared economic benefit that this represents."

When the Atikokan project is complete and the Company's upgraded Ignace facility re-opens, Resolute will have three modern sawmills in Northwestern Ontario, with a combined production capacity approaching approximately 600 million board feet. In addition to producing lumber, the sawmills will also contribute to the long-term competitiveness of the Company's pulp and paper operations in Thunder Bay through the supply of residual chips, as well as support efforts to reposition the currently indefinitely idled pulp mill in Fort Frances.

Today's announcement was welcomed by Ontario Natural Resources Minister Michael Gravelle. "This is extremely good news for the economy in Northwestern Ontario, and specifically the Atikokan area. I am particularly pleased to see Resolute's proactive effort to involve First Nations in a manner that creates opportunities and shared benefit. Our Ministry has worked hard with First Nations and municipalities to increase opportunities for direct involvement in the rebounding forestry sector, and today's announcement is a real indicator of the progress we have made," said Minister Gravelle. "We welcome the additional investment by Resolute in Ontario. Over the past 18 months, the Company has announced over C$175 million of investments in the province, and I am certainly encouraged that a new sawmill in Atikokan could potentially make a positive contribution as Resolute continues to look at viable options for its Fort Frances pulp mill."

In commenting on today's announcement, Gary Allen, Chief of Nigigoonsiminikaaning First Nation, stated: "We are encouraged by Resolute's investment plans in our traditional area and look forward to working with the company to achieve our economic goals and establish business opportunities associated with this project."

Seine River First Nation Chief Earl Klyne agreed, stating: "We are pleased to see this announcement being made today by Resolute. It was most positive that the Company involved First Nation communities in the early stages of this project to identify areas of economic opportunity that we can pursue together."

Bill Mauro, MPP of Thunder Bay-Atikokan, also joined other public officials in welcoming this announcement: "As the MPP for Thunder Bay-Atikokan, I want to thank Resolute for this positive announcement. This capital investment will create a good number of construction jobs and significant long-term employment in the Atikokan area. This investment is also another important signal that the forestry sector continues to improve, and that Resolute will be a major employer in our region for years to come."

Thunder Bay-Rainy River MP John Rafferty expressed his gratitude towards this investment: "This is certainly good news for forestry workers and communities in the Northwest, particularly Atikokan. We should all be pleased with Resolute's commitment to sustainable forestry practices and their belief in strong communities and family-sustaining jobs."

"This is great news for our community and the surrounding area. These jobs will be critically important in providing economic stability for our region," added Atikokan Mayor Dennis Brown. 

SOURCE: Resolute Forest Products Inc.

Published in Canadian News

abiti122011Resolute Forest Products welcomes the Government of Canada's introduction of Bill C-52, the Fair Rail Freight Service Act, which will provide a framework to make railways more accountable to their customers for providing acceptable levels of service. The bill is expected to be voted into law in spring 2013.

Bill C-52 is an important first step in the process of rebalancing the commercial relationship between the railways and their customers, the companies that depend on rail services to bring their products to market. The legislation gives shippers the right to negotiate Service Level Agreements (SLAs) with railways, and sets up a dispute resolution process if negotiations fail, as well as penalties for non-performance by the rail service providers.

"We congratulate Ministers Lebel and Oliver and their Cabinet colleagues for all of their hard work in bringing Bill C-52 to Parliament," said Richard Garneau, President and Chief Executive Officer. "We look forward to working with the government as the bill moves forward through the parliamentary process in order to ensure the Act achieves its intended goals." 

SOURCE: RESOLUTE FOREST PRODUCTS INC.

 

Published in Canadian News
Tuesday, 11 December 2012 08:50

Resolute Announces Sale of Mersey Assets

abiti122011Resolute Forest Products Inc. has announced that the province of Nova Scotia, represented by the minister of the Department of Economic and Rural Development and Tourism, has completed the purchase of all the shares of Bowater Mersey Paper Company Limited for nominal consideration.

Bowater Mersey is the former joint venture between Resolute (51%) and The Washington Post Company (49%), formed to hold the Mersey newsprint mill, located in Brooklyn, Nova Scotia, and other associated assets, including private timberlands, the Oakhill sawmill and Brooklyn Power Corporation. Resolute operated the Mersey newsprint mill until it was indefinitely idled in June of 2012.

Before closing the transaction, Resolute purchased from Bowater Mersey the assets associated with the Oakhill sawmill and, in connection with the closing, certain components of the paper mill, which can no longer be used to make paper. At closing, Resolute received a cash payment of approximately $18 million, representing a reimbursement of working capital advances by Resolute to Bowater Mersey to fund its operations, net of transaction-related items.

SOURCE: RESOLUTE FOREST PRODUCTS INC.

Published in Canadian News

abiti122011Resolute Forest Products has announced plans to build an industrial wood pellet plant that will convert a currently underutilized residual material into a reliable source of renewable energy. Construction of the plant is expected to begin shortly and is scheduled for completion in 2014. The Company has signed a ten-year agreement to supply Ontario Power Generation with 45,000 metric tons of pellets annually.

The plant will be built adjacent to the Company's sawmill in Thunder Bay, Ontario, creating approximately 24 new jobs when fully operational and improving the long-term viability of the sawmill and the approximately 350 jobs that it supports.

"Wood pellets are a clean, renewable energy source, and together with other biofuel opportunities, a natural diversification target for Resolute," said Richard Garneau, President and Chief Executive Officer. "This project provides the opportunity to enhance the use of our existing asset base to produce biofuel for a strategic, committed consumer and allows the Company to gain valuable manufacturing experience in commercial biomass production."

Resolute will invest approximately C$10 million in the construction of the plant, adding to the investments of approximately C$120 million the Company has announced for its Ontario operations since 2011. 

SOURCE: RESOLUTE FOREST PRODUCTS INC.

 

Published in Energy News

abiti122011Resolute Forest Products on the 20th November has announced the indefinite idling of the kraft mill and paper machine number 5 (PM5) at its pulp and paper operation in Fort Frances, Ontario. The kraft mill has an annual production capacity of approximately 200,000 metric tons of market pulp, while PM5 has an annual capacity of 105,000 metric tons of groundwood specialty printing papers.

"The markets for these products are challenging and are expected to remain so. The kraft mill situation is particularly difficult given Fort Frances' operating configuration and the recent decision by a key customer to stop consuming the pulp supplied by Resolute to its mill," said Resolute's President and Chief Executive Officer, Richard Garneau. "Our kraft mill's drying capacity is limited to about 40 percent of its production capacity, making it impossible to continue operating the mill in a profitable manner."

Resolute is exploring alternative product possibilities for its Fort Frances pulp mill, which will be idled in a manner that will protect the equipment.

The idling of PM5 is driven by the decrease in consumption as well as the high value of the Canadian dollar.

"We will monitor market conditions closely and work with key stakeholders to explore ways to improve the mill's cost position," added Garneau.

The running down of fiber inventories and orderly shutdown of the Fort Frances kraft mill is expected to be completed by late November. PM5 will also continue to operate until late November. Approximately 239 employees will be impacted by the idling.

Resolute Forest Products will work with affected employees, all levels of government and other local authorities on programs to lessen the impact of the idling. Resolute employees affected by this idling will also be considered for job vacancies and opportunities at other Company facilities. In all cases, employees will be treated in accordance with the applicable collective agreements and Provincial legislation. 

SOURCE: RESOLUTE FOREST PRODUCTS INC. 

Published in Canadian News

abiti122011Resolute Forest Products (NYSE: RFP) (TSX: RFP) has certified an additional 3.5 million hectares (8.6 million acres) of Company-managed forestlands in Quebec to Forest Stewardship Council® (FSC) standards. These new certifications raise the total area of Resolute tenures that are FSC-certified in North America to 15.8 million hectares (39 million acres), an area larger than Greece and twice the size of Ireland.

  • Resolute already world's largest manager of FSC-certified forests 

The newly-certified areas include 2.2 million hectares (5.4 million acres) in the Baie-Comeau region of Côte-Nord and 1.3 million hectares (3.2 million acres) in the Senneterre region of Abitibi, the latter representing a joint certification with Tembec. The combined area is equivalent in size to Belgium.

Resolute has committed to increasing FSC certification of its forest tenures from 18% in 2010 to 80% in 2015. As of today, the Company has certified approximately 65% of its forests to FSC standards. 100% of the forests managed by Resolute are already certified to at least one of three internationally-recognized responsible forest management standards - FSC, Canadian Standards Association (CSA Z809) and Sustainable Forestry Initiative® (SFI).

"Obtaining FSC certification for an area this size is a major milestone," said Richard Garneau, President and Chief Executive Officer. "The dedication of our forestry teams has been instrumental in Resolute becoming the largest manager of FSC-certified forests in the world. Such an achievement demonstrates our ongoing commitment to responsibly managing the natural resources in our care."

FSC is an international certification and labelling system dedicated to promoting responsible management of the world's forests. Co-founded in Canada by the World Wildlife Fund in 1993, FSC works to endorse environmentally appropriate, socially beneficial and economically viable forest management. FSC is an important example of partnership between environmental organizations and businesses.

SOURCE: RESOLUTE FOREST PRODUCTS INC.

 

Published in Canadian News

abiti122011Resolute ForestProducts has announced two major investments today, totaling C$11 million, at its Comtois sawmill in Lebel-sur-Quévillon, Quebec, and its Senneterre, Quebec, sawmill.

At the Comtois sawmill, $9 million will be invested in the construction of a new saw line. This equipment will enhance the sawmill's performance by increasing the volume of lumber produced and reducing fiber loss. The $2 million investment at the Senneterre sawmill will improve the performance of the planing complex.

Yves Laflamme, Senior Vice President, Wood Products, said that these investments will reinforce the Company's competitiveness, which is essential to maintaining jobs in the northern Québec and Abitibi-Témiscamingue regions.

"After several difficult years, we believe that these investments will put us in a good position to benefit from a turnaround in residential construction in the United States. The upgrades will consolidate our activities in both regions by creating synergies, stabilizing our operations and preserving good jobs. The investments will make our two facilities more competitive and boost their performance. We are all the more pleased and proud because today's announcement will generate substantial economic spinoffs in Abitibi-Témiscamingue and northern Quebec," he added.

Given the market outlook for lumber, Resolute Forest Products plans to focus on wood products. In this regard, President and Chief Executive Officer Richard Garneau reiterated "the Company's ongoing commitment to be a sound, strong, profitable organization that produces top-quality products and supports sustainable development." He also repeated Resolute's intention to lay the foundations for its development and growth by investing in competitive assets and promising markets in order to contribute to the organization's overall profitability.

Once the work is completed in the second quarter of 2013, the Company will be well equipped to reduce its conversion costs and improve product quality. Its competitive position in northern Quebec and Abitibi-Témiscamingue will be stronger, and the investments will generate positive economic spinoffs in both regions. 

SOURCE: RESOLUTE FOREST PRODUCTS INC.

 

Published in Canadian News

abiti122011Resolute Forest Products has announced that it is permanently shutting down paper machine No. 10 at its Laurentide mill in Shawinigan, Quebec. The permanent shutdown comes after an important drop in demand and an increase in market capacity of the paper grade produced on machine No. 10.

The Laurentide mill, which currently has 388 employees, produces over 350,000 metric tons per year of commercial printing papers with two machines. Machine No. 10 produces 125,000 metric tons per year. This machine will cease production on November 26, eliminating nearly 111 jobs. The shutdown will not affect paper machine No. 11, which has an annual production of nearly 225,000 metric tons per year.

The Company is aware of the impacts this decision will have on the employees concerned and their families and will work with union representatives and the governments to mitigate these impacts with a focus on retirement. Management intends to make sure that all the employees affected receive the necessary support, in compliance with the relevant collective agreement terms, and that as many employees as possible are reassigned to other Company facilities.

Resolute President and Chief Executive Officer Richard Garneau noted that market demand and capacity, the strong Canadian dollar, rising freight and fuel costs, and the continuing high cost of fiber also factored into management's decision. "Resolute must prove that it is profitable with mills that perform well, which forces us to improve our competitive edge by focusing on our best assets and cutting costs," stated Richard Garneau. "This is a major challenge and we are confident that we, with our employees, will be able to meet it." 

SOURCE: RESOLUTE FOREST PRODUCTS INC

Published in Canadian News

abiti122011Resolute Forest Products has reported net income of $31 million for the third quarter, or $0.32 per diluted share, on sales of $1.2 billion. This compares with a net loss of $44 million, or $(0.46) per share, on sales of $1.2 billion in the third quarter of 2011.

Excluding $24 million of special items described below, net income for the quarter was $7 million, or $0.07 per diluted share. Net income excluding special items for the third quarter of 2011 was $50 million, or $0.50 per diluted share.

Special items incurred in the third quarter of 2012, net of tax, included:

  • $21 million non-cash gain on translation of Canadian dollar net monetary assets
  • $6 million non-cash credit related to reorganization-related and other tax adjustments
  • $4 million charge related to start-up costs at the Dolbeau mill
  • $3 million gain on disposition of assets
  • $3 million charge related to closure costs, impairment and other related charges
  • $2 million income from other items
  • $1 million charge for post-emergence costs

Special items incurred in the third quarter of 2011, net of tax, included:

  • $69 million non-cash charge on translation of Canadian dollar net monetary assets
  • $14 million charge related to closure costs, impairment and other related assets
  • $9 million charge for post-emergence costs
  • $4 million severance charge
  • $3 million income from other items
  • $1 million loss on disposition of assets

Adjusted EBITDA of $91 million in the quarter compares with $120 million in the second quarter and $150 million in the third quarter of 2011.

Non-GAAP financial measures, such as adjustments for special items and adjusted EBITDA, are reconciled below.

THIRD QUARTER OPERATING INCOME VARIANCE

Operating income for the third quarter was $26 million, compared to $72 million in the third quarter of 2011.  The most significant components of the $46 million variance include: a volume decline for $51 million as a result of the Company reducing its exposure to newsprint export markets pressured by the strong U.S. dollar, its ongoing asset optimization efforts and a temporary but unexpected drop in September lumber shipments.  The lower average Canadian dollar this quarter provided a $7 million cost advantage.  The Company's asset optimization and restructuring initiatives, as well as more favorable pricing for recovered paper, power and natural gas, led to savings of $13 million in overall input costs, despite $6 million of costs associated with the annual outage at our Fort Frances pulp mill, last taken in the second quarter of 2011.  In addition, there was a $10 million unfavorable impact for the annual maintenance and necessary work to improve the operational and environmental performance of the recently acquired St. Felicien mill.  While the stronger pricing in wood products offset weak conditions in the market pulp segment, price eroded $9 million of operating income in paper grades, mostly in the coated papers segment.

"We're pleased with these results, considering the specific challenges we faced in the quarter and the unexpected extent of the maintenance required to bring our recently acquired St. Felicien mill up to par," said Richard Garneau, president and chief executive officer. "Our cost-focused strategy allowed us to maintain attractive margins in the paper and wood products segments despite lower shipments overall. This is the direct result of our focus on the items we control: selling only profitable tons and maintaining world-class operational standards." 

SEGMENT DETAILS

Newsprint

The newsprint segment generated operating income of $26 million, a $6 million decrease from the second quarter of 2012.  Average transaction price remained stable, but there was a 3% reduction in shipments as the Company continued to minimize its exposure to certain challenging export markets and took an outage for a capital improvement project.  Continued asset optimization efforts kept operating costs per unit in line, despite the stronger Canadian dollar and lower volume.

Coated Papers

Operating income in the coated papers segment was $1 million lower in the third quarter than the second, at $3 million.  Average transaction price rose $10 per short ton, but shipments were down over 10% as a result of the June 30 idling of a paper machine at the Catawba mill, part of the Company's ongoing asset optimization efforts.  The lost volume was largely offset by labor cost reductions from these restructuring initiatives, as well as lower maintenance and chemical costs.

Specialty Papers

The specialty papers segment generated operating income of $26 million, a $1 million decrease from the previous quarter.  Improvements to input costs, mainly lower labor costs from various mill efficiency initiatives, largely offset the stronger Canadian dollar and a 4% reduction in shipments, the result of softer demand and a capital improvement project outage.  Pricing remained stable, helping to deliver the second consecutive quarter of adjusted EBITDA of approximately $100 per short ton shipped.

Market Pulp

Operating loss in the market pulp segment was $22 million, compared to $7 million in the previous quarter.  Fibrek's results decreased by $17 million compared to the second quarter, mainly as a result of lost production and costs associated with the St. Felicien mill's previously announced five week outage for annual maintenance and necessary work to improve its environmental performance.  Average transaction price remained weak, falling another 1%, but shipments climbed 12%, reflecting three months of volume from Fibrek's two recycled bleached kraft pulp mills, compared to only two months in the previous quarter, and a 10,000 metric ton improvement in Resolute shipments as a result of less maintenance. The Company took 109,000 metric tons of downtime during the quarter, including the St. Felicien outage, a cold outage at Thunder Bay, market slowback at the two recycled bleached kraft pulp mills and extended downtime at the Coosa Pines fluff pulp mill.

Wood Products

The wood products segment reported operating income of $6 million in the third quarter, $6 million lower than the second.  Continued improvements to North American housing starts led to a 9% increase to average transaction price, but shipments fell 11% as a result of a drop in September lumber shipments.  Costs increased because of higher log costs and higher transportation costs.

CORPORATE & FINANCE

The Company used cash on hand to repurchase 2,609,680 shares of common stock during the quarter, at a total cost of $33 million, and to repay $97 million of Fibrek's debt.  With $343 million of cash, the Company ended the quarter with $872 million of available liquidity, and $282 million in net debt, up from $212 million at the end of the second quarter.

As previously announced, on October 10, Resolute redeemed $85 million of its 10.25% senior secured notes due 2018, using cash on hand.  The aggregate face amount of the notes is now approximately $500 million.

The Company is pleased that Standard & Poor's Ratings Services recently affirmed its long-term corporate credit rating (BB-, stable) and upgraded the issue-level rating on the senior secured notes to BB.

OUTLOOK

Mr. Garneau added: "we expect North American newsprint pricing to remain stable in the near term, as we've yet to feel the impact of capacity restarts.  We will, however, continue to manage our exposure to export markets where the relative strength of the U.S. dollar has created difficult conditions for North American producers.  We are making concrete progress toward our goal of generating more profit from the coated papers segment by optimizing the Catawba assets.  We expect the results to start showing in the coming quarters, as we plan to run full on the remaining capacity.  While demand in the specialty segment is under pressure, we believe that our Dolbeau facility will improve our overall competitive position.  With our focus on running for profit and not for tons, we will continue to manage our capacity as we've done in the last 12 months, assessing our network of mills to ensure that we produce only the tons our customers order.  As challenging conditions persist in the pulp segment, the timing of any meaningful improvement continues to be uncertain.  We will nonetheless benefit from growing external power sales at the St. Felicien facility, though the effects may not be fully seen until we complete the balance of needed repairs over the next two quarters.  We expect pricing in the wood products segment to remain near the higher levels we experienced recently as a result of positive momentum building in U.S. housing starts." 

SOURCE: RESOLUTE FOREST PRODUCTS INC.

 

Published in Financial News
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