Pulp and Paper Canada

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Co-gen contributes to low costs for Resolute in Q2


August 7, 2013
By Pulp & Paper Canada

Resolute Forest Products Inc. reported a net loss of US$43 million for the quarter ended June 30, 2013, on sales of US$1.1 billion. This compares with a net loss of US$17 million, on sales of US$1.2 billion in the second quarter of 2012.

Resolute Forest Products Inc. reported a net loss of US$43 million for the quarter ended June 30, 2013, on sales of US$1.1 billion. This compares with a net loss of US$17 million, on sales of US$1.2 billion in the second quarter of 2012.

“We faced softer pricing conditions overall in the second quarter, but we preserved margin with efficiencies and cost reductions,” said Richard Garneau, president and CEO.  “Our continued focus on operational excellence in our streamlined asset base makes us competitive even in environments like those facing our industry today.”

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The company now operates four fewer machines overall compared to the year-ago period, excluding the three pulp mills acquired with Fibrek Inc.

Operating income in the newsprint segment was US$10 million in the second quarter, a US$12 million improvement over the first quarter. According to Resolute, a 7% drop in operating cost per unit (“delivered cost”), or US$42 per tonne, more than offset the 3% reduction in average transaction price, the steepest price drop in three consecutive quarters of declines.  Newsprint production costs touched record company lows in the quarter due to lower labor and seasonal steam costs, and the favorable full-quarter contribution of power sales from the new Thunder Bay cogeneration assets.  The Gatineau, Québec, mill began making newsprint in May, and its cogeneration facility made its first sale of power on June 15.

Resolute reports that its market pulp segment generated operating income of US$10 million in the second quarter, US$15 million higher than in the previous quarter. Sales increased by 10% to US$263 million on a 4% increase in average transaction price, and a 5% increase in shipments.

In his outlook, Garneau noted that domestic newsprint prices have stabilized but the markets remain fragile as North American exports gradually improve. “We expect relatively stable market conditions in market pulp for the balance of the year, and modest seasonal improvements in coated and specialty papers during the third quarter,” he stated. “Except for scheduled maintenance, we plan to run our pulp and paper assets to capacity for the balance of the year to satisfy customer requirements.  Our lean and efficient operating platform is our key advantage to compete, even in unstable pricing environments.”


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