While reporting net earnings of $17.1 million for 2008, Quebec-based SFK Pulp announced it will cut production and …
While reporting net earnings of $17.1 million for 2008, Quebec-based SFK Pulp announced it will cut production and temporarily lay off up to 225 workers at its Saint-Félicien, Que. mill in response to market demand.
SFK announced last week its fourth quarter sales were up 0.6% to $125.1 million, while earnings before amortization, financial charges and income taxes (EBITDA) reached $14.9 million, up from $8.9 million. Net earnings rose $4 million, compared to a net loss of $0.4 million in the same period last year.
Sales for all of 2008 rose by 4.3% to $532 million. EBITDA was stable at $60.4 million, while net earning amounted to $17.1 million, compared to a $9.4 million loss in 2007.
Responding to the current market demand, SFK announced it will stop production at its Saint-Félicien, Que mill for six weeks. The company will also halt production at its Fairmont, West Virginia mill for one month. These measures aim to reduce production by 45,000 tonnes of northern bleached softwood kraft (NBSK) pulp and 25,000 tonnes of recycled bleached kraft (RBK) pulp. The shutdowns are planned to take effect this month, and will result in the temporary layoff of up to 225 workers at the Saint-Félicien mill.
Pierre Gabriel Côté, SFK Pulp Fund president and CEO, said the measures were necessary for the company to be able to tackle a difficult 2009.
“As part of our proactive management strategy, SFK Pulp has implemented additional cost reduction measures in 2009 to further tighten the existing stringent cost controls at all sites and to optimize margins and liquidity. Furthermore, we are already seeing that current economic conditions have resulted in cost reductions for commodities used in our production, such as fuel, certain chemicals and wastepaper,” Côté said. “We expect 2009 will pose unprecedented difficulties. As such, we will continue to take all necessary measures to face these challenges by further protecting our strong balance sheet as well as prudently managing our working capital and inventory levels.”
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