By Cindy Macdonald
Fortress Paper Ltd. reported operating EBITDA of $5.5 million for the third quarter ended September 30, 2015, an increase of $1.4 million and $7.0 million over the previous quarter and prior year comparative period, respectively.
The dissolving pulp segment generated operating EBITDA of $5.4 million and the Security Paper Products Segment generated operating EBITDA of $2.2 million. Corporate costs included in operating EBITDA were $2.1 million.
“We were pleased to report another quarter of positive momentum and overall improvement in our operating EBITDA, led by dissolving pulp,” stated Yvon Pelletier, CEO. “In dissolving pulp, our ongoing efforts to diversify our end market exposure are gaining traction while market dynamics continue to show signs of improvement. In Security Paper, we had lower shipments compared to the prior quarter largely due to product mix and timing of sales.”
Operating EBITDA for the dissolving pulp segment was $5.4 million for the third quarter of 2015, representing an improvement of $3.3 million over the second quarter of 2015. The company says the results for the quarter were impacted mainly by improved pricing, increased power generation under the additional power supply agreement with Hydro Quebec, and favourable exchange rates.
According to Fortress, its production costs for dissolving pulp averaged $818 per ADMT in the third quarter. Production costs increased slightly over Q2 cost mainly due to increased repairs and maintenance cost compared to prior quarter. Sales for dissolving pulp totaled $48.5 million for the quarter compared to $39.9 million for the second quarter of 2015. The cogeneration facility at the Fortress Specialty Cellulose mill in Thurso, Que., generated $5.9 million in sales revenue from the generation of power in the third quarter compared to $5.5 million in the second quarter of 2015.
The company is “on target to reduce its dissolving pulp shipments to China by approximately 20 per cent over the second half of the year” as compared to the first six months of 2015.
The business focus for the dissolving pulp segment continues to be on ongoing cost reduction initiatives, production improvement, power generation and product development to improve margins at the mill, says Fortress.