AbitibiBowater announces fourth quarter and full year 2007 financial results
By Pulp & Paper Canada
By Pulp & Paper Canada
AbitibiBowater Inc. today reported a net loss for the fourth quarter 2007 of $250 million, or $5.09 per diluted share, on sales of $1,491 million. These results compare with a net income of $107 million, or $3.58 per diluted share, on sales of $861 million for the fourth quarter of 2006.
For the full year 2007, the Company reported a net loss of $490 million, or $14.11 per diluted share. This compares with a net loss of $138 million, or $4.64 per diluted share, for 2006. Sales in 2007 totaled $3.9 billion, up 11% from 2006 sales of $3.5 billion.
The Company’s 2007 fourth quarter and year-end results reflect the full quarter and year-end results for Bowater Incorporated and the results for Abitibi-Consolidated Inc. for the period following its combination with Bowater on October 29, 2007. The Company’s fourth quarter and year-end results for 2006 include only Bowater results.
Fourth quarter 2007 special items, net of tax, consisted of the following items: a $53 million gain relating to foreign currency changes and asset sales, a $130 million loss related to asset closures, $27 million severance and merger-related costs and a $31 million charge related to tax adjustments. Excluding these special items, the net loss for the quarter would have been $115 million, or $2.34 per diluted share. A reconciliation of these non-GAAP measures is contained in Note 11 to this release.
During the first quarter of 2008, AbitibiBowater has removed almost one million metric tons of high-cost capacity in line with its previously announced Phase 1 comprehensive review of operations, while also making significant inroads on its cost synergy target of $375 million from the combination of Abitibi-Consolidated and Bowater.
“While markets for wood products remain challenging, market conditions for pulp and paper products are improving significantly and we are pleased with our ongoing progress to make our Company a more globally competitive organization,” stated John W. Weaver, Executive Chairman. “Our recently announced agreement with Catalyst Paper, to sell our Snowflake, Arizona, newsprint mill for approximately $180 million, including retained working capital, is another important milestone. We remain committed to our debt reduction target of $1 billion over the next three years.”
The Company has been actively engaged in its Phase 2 comprehensive review of operations since the merger was completed and expects that an announcement regarding its decisions will be forthcoming during the second quarter of 2008. The Company is focused on further cost reductions and manufacturing platform improvements in both the paper and wood products segments.
“Since our Phase 1 announcement, we have been working with our employees, unions, governments and communities in an effort to address the challenges that we face today. We are operating in a rapidly changing business environment and we will take the necessary steps to position AbitibiBowater for the future,” said David J. Paterson, President and Chief Executive Officer. “In order to remain a competitive, viable supplier and provide our stakeholders with appropriate returns, we must significantly improve the margins for our products. Our recently announced price increases were a successful step.”
The Company also announced today that it has successfully amended Bowater’s credit facilities. The amendments permit, among other things, an intercompany restructuring of the ownership of the Company’s Catawba, South Carolina, mill in order to permit additional debt financing by Bowater and/or the Company. Among other liquidity needs that must be addressed, the Company’s Abitibi-Consolidated subsidiary has second quarter debt maturities of approximately $200 million due April 1 and $150 million due June 20 that have not yet been refinanced. The Company confirmed that it has been reviewing multiple financing alternatives to develop additional liquidity for the remainder of 2008 and 2009. The Company cautioned that continued negative conditions in the credit and capital markets, as well as the difficult industry operating environment, are challenging its ability to obtain such financing and that there can be no assurance that either the Company, Abitibi-Consolidated or Bowater could obtain such financing on terms satisfactory to the Company.