Catalyst Posts Fourth Quarter Loss on Strong Canadian Dollar
Jan. 25, 2006 - Catalyst Paper recorded a net
loss of $8.0 million in the fourth quarter. The adverse impact of the Canadian
dollar which reached a 14 year high versus the US dollar during the quarter
was offset by continued performance gains.
During the quarter, the company successfully completed its 2005
performance improvement program, exceeding its $80-million target by five per
cent to capture $84 million.
"In Canadian-dollar terms we made good, steady progress in managing costs
and improving our performance," said Catalyst president and chief executive
officer Russell J. Horner. "We are making the most of competitive advantages
like affordable electricity and fibre, low exposure to fossil fuels and our
proximity to the western US market. Yet with most of our sales in US dollars,
the exchange rate makes it tough to gain ground."
The fourth-quarter net loss of $8.0 million ($0.04 per common share) on
sales of $471.9 million compared with net earnings of $34.2 million ($0.16 per
common share) on sales of $450.3 million in the previous quarter. Earnings
before interest, taxes, depreciation and amortization (EBITDA) totalled
$48.3 million in the fourth quarter, up slightly from $47.9 million in the
The company posted an after-tax foreign exchange loss of $2.2 million
($0.01 per common share) in the fourth quarter from the translation of US-
dollar-denominated debt, with operating earnings of $2.3 million. This
compares to a third quarter after-tax foreign exchange gain of $31.9 million
($0.15 per common share) and operating earnings of $2.8 million.
Markets for the company's specialty paper products were generally stable
during the fourth quarter. Coated paper prices were flat, while steady demand
for uncoated mechanical paper allowed modest price increases for machine
finished hi-brite grades. Demand and prices for directory paper were stable,
while increasing corrugated box demand and low inventories helped boost kraft
paper prices late in the quarter. Pulp demand remained largely unchanged while
quarter over quarter prices increased slightly.
While US newsprint consumption declined further due to decreases in ad
lineage, circulation and average basis weights, foreign exchange and energy
pressures continued to put upward pressure on pricing.
"With US newsprint consumption continuing to decline, we see our shift to
higher-value specialty papers as the prudent step to take," said Horner. "We
are well positioned to cope with continued reductions in newsprint demand and
we have the flexibility to switch grades quickly to keep step with market
Annual results for 2005 saw the company post a net loss of $25.6 million
($0.12 per common share) and an operating loss of $25.1 million on sales of
$1,823.9 million. This compares with a net loss of $28.6 million ($0.13 per
common share) and an operating loss of $31.3 million on sales of
$1,878.2 million for 2004.
The 2005 results included a $20.7 million ($0.10 per common share) after-
tax foreign exchange gain on the translation of U.S. dollar debt, compared to
an after-tax gain of $44.0 million ($0.21 per common share) for 2004. EBITDA
for 2005 was $155.2 million, up from $152.8 million for 2004.
In 2006, the company will undertake its fifth consecutive annual
performance improvement program. With a target of $70 million, the program
will focus on energy efficiencies, productivity improvements and grade
optimization to maximize profitability in a challenging economic environment.
Catalyst is a leading producer of mechanical printing papers in North
America. The company also produces de-inked and market kraft pulp. With five
mills employing 3,800 people at sites within a 160 kilometre radius on the
south coast of British Columbia, Catalyst has a combined annual capacity of
2.5 million tonnes of product. Catalyst Paper Corporation common shares trade
on the Toronto Stock Exchange under the ticker symbol CTL. The company is
headquartered in Vancouver, B.C.
SOURCE: Catalyst Paper Corporation