Exchange rate helps Catalyst earnings
By Cindy Macdonald
Facing continued price erosion for many of its products, Catalyst Paper announced adjusted earnings before tax, depreciation and amortization (EBITDA) of $17.1 million in the quarter ended March 31, 2016. Adjusted EBITDA before specific items was $17.7 million, compared to adjusted EBITDA before specific items of $19.8 million in the fourth quarter of 2015.
In the first quarter, the company reported $16.9 million in net earnings and a net loss before specific items of $5.1 million, compared to a net loss of $26.3 million and a net loss of $10.0 before specific items in the fourth quarter of 2015. First quarter earnings benefited from a $22.6 million foreign exchange gain on the translation of U.S. dollar denominated debt.
Joe Nemeth, president and CEO, says the company is “ramping up our programs to reduce costs, improve existing product mix and grow new specialty paper sales.”
Catalyst has re-started production on PM12 at its Rumford, Maine, facility. The paper machine has been being indefinitely curtailed last September. In a statement, Catalyst said the decision is a “proactive action by management to more fully leverage integrated capabilities at Rumford.” The machine will be dedicated to the production of coated paper and Rumford Offset, a newly developed uncoated free sheet product.
The statement of first quarter results also acknowledged the employee fatality that occurred at the Crofton mill in January. It said the company remains “diligently focused on improving our performance, and strengthening our safety culture and behaviours.”
In the second quarter of 2016, Catalyst expects continued demand and pricing pressure in all grades with the exception of newsprint and NBSK pulp, which are benefiting from recent price increases. Energy costs for the company’s British Columbia mills will increase as a result of a four per cent hydroelectricity rate increase in British Columbia effective April 1, 2016. Catalyst is also subject to the continued imposition of countervailing duties on the export to the United States of supercalendered paper.