Positive pricing momentum evident in Catalyst Q2 results

    RICHMOND, BC, July 29 /CNW/ - Catalyst Paper (TSX:CTL) recorded a net
loss of $124.3 million ($0.34 per common share) on sales of $452.9 million in
the second quarter. Results were significantly impacted by an after-tax
impairment charge of $101.0 million related to the closure of the Elk Falls
pulp and white top linerboard operation in November. Net loss before specific
items in the second quarter was $22.7 million ($0.06 per common share)
compared to $21.8 million ($0.10 per common share) in the previous quarter.
    Earnings before interest, taxes, depreciation and amortization (EBITDA)
in the second quarter were $29.5 million compared to $12.1 million in the
first quarter. This primarily reflected lower restructuring costs of $1.2
million compared to $14.6 million in the first quarter and higher product
prices which more than offset the negative impact of the Canadian dollar and
higher input costs. EBITDA before specific items was $30.7 million, compared
to $26.7 million in the first quarter.
    "We realized positive cash flow from operations and pricing momentum was
maintained in the second quarter," said Richard Garneau, president and chief
executive officer. "While this helped offset the twin challenges of declining
paper consumption and inflationary input costs it could not make up for the
permanent disappearance of traditional sawdust fibre supply. This was the
primary factor in our recent decision to shut down pulp and white top
linerboard operations at Elk Falls later this year."
    The fibre shortage which has persisted since late 2007 intensified in the
second quarter of 2008 as the U.S. housing crisis caused sawmills throughout
Catalyst's fibre supply region to shut permanently, reduce, or divert
production. Market supply remained tight as industry capacity kept pace with
reduced paper demand and a decline in print advertising due to the overall
U.S. economic slowdown.
    Paper markets were mixed. Previously announced price increases were
largely or partially implemented across all grades. Further price increases
for most paper products were announced to take effect July 1 including US$60
per tonne on directory spot volume and an additional US$60 per tonne on
newsprint phased in through the third quarter. Pulp and white top linerboard
markets were steady in the second quarter and demand for Northern Bleached
Softwood Kraft (NBSK) pulp is expected to remain in balance for the remainder
of the year.
    Business integration and restructuring continued in the second quarter
with the successful completion of the Snowflake mill acquisition on April 10
which added 63,100 tonnes of recycle newsprint to the production mix in the
second quarter. Further workforce adjustments affecting some 227 positions at
the Crofton and Elk Falls mills began in May as Catalyst continued to reduce
its overall cost structure.
    Looking ahead, lumber markets are expected to remain weak through the
balance of 2008. This will continue to put a strain on fibre availability and
the company will adjust production as required. As a result of the weaker
coated market, Port Alberni mill reduced coated production in late June and
has run uncoated mechanical grades on the No. 5 paper machine for eight days
in July. The company will continue to take full advantage of machine
flexibility to shift production between grades as market demand dictates.

    Selected Financial Highlights

    (In millions of dollars, except
     where otherwise stated)
                           YTD         Q2         Q1
    Sales                $  852.4   $  452.9   $  399.5

    Operating earnings
     (loss)                (182.9)    (153.3)     (29.6)
    EBITDA(1)                41.6       29.5       12.1
      - before specific
         items(1)            57.4       30.7       26.7
    Net earnings (loss)    (161.7)    (124.3)     (37.4)
      - before specific
         items(1)           (44.5)     (22.7)     (21.8)

    EBITDA margin(1)(2)       4.9%       6.5%       3.0%
      - before specific
         items(1)(2)          6.7%       6.8%       6.7%
    Net earnings (loss)
     per share
     (in dollars)
      - basic and
         diluted         $  (0.56)  $  (0.34)  $  (0.17)
      - before specific
         (in dollars)
          - basic and
            diluted(1)      (0.15)     (0.06)     (0.10)

    (In millions of dollars, except
     where otherwise stated)
                          TOTAL        Q4         Q3         Q2         Q1
    Sales               $1,714.6   $  381.0   $  413.7   $  441.8   $  478.1

    Operating earnings
     (loss)               (149.4)     (27.7)     (44.3)     (46.7)     (30.7)
    EBITDA(1)               27.0       15.1       (0.3)      (1.9)      14.1
      - before specific
         items(1)          116.7       28.8       37.4       17.4       33.1
    Net earnings (loss)    (31.6)      12.4      (18.6)       0.2      (25.6)
      - before specific
         items(1)          (89.3)     (20.9)     (16.9)     (31.8)     (19.7)

    EBITDA margin(1)(2)      1.6%       4.0%      (0.1%)     (0.4%)      2.9%
     - before specific
        items(1)(2)          6.5%       6.6%       8.5%       3.9%       6.9%
    Net earnings (loss)
    per share
    (in dollars)
     - basic and
        diluted         $  (0.15)  $   0.06   $  (0.09)  $   0.00   $  (0.12)
     - before specific
        (in dollars)
         - basic and
           diluted(1)      (0.42)     (0.10)     (0.08)     (0.15)     (0.09)
    (1) EBITDA, EBITDA before specific items, EBITDA margin, EBITDA margin
        before specific items, net earnings (loss) before specific items, and
        net earnings (loss) per share before specific items are non-GAAP
        measures. Refer to Q2 2008 MD&A - Section 7, "Non-GAAP Measures" for
        further details.
    (2) EBITDA margin and EBITDA margin before specific items are defined as
        EBITDA and EBITDA before specific items as a percentage of sales and
        adjusted sales, respectively. Refer to Q2 2008 MD&A - Section 7,
        "Non-GAAP Measures" for further details.

    Further Quarterly Results Materials

    This release, a summary slide presentation, and full quarterly report
(MD&A, financial statements and accompanying notes) are available on our web
site at www.catalystpaper.com/Investors. The full quarterly report is also
filed with SEDAR in Canada and EDGAR in the United States.
    Catalyst is the largest producer of specialty printing papers and
newsprint in Western North America and also produces market kraft pulp and
owns Western Canada's largest paper recycling facility. The company's six
mills have a combined annual capacity of 2.8 million tonnes of production.
Catalyst is headquartered in Richmond, British Columbia, Canada and its common
shares trade on the Toronto Stock Exchange under the symbol CTL.

    Richard Garneau, president and CEO and David Smales, vice-president,
finance and CFO will hold a conference call with financial analysts and
institutional investors on Wednesday, July 30, 2008 at 11 a.m. ET, 8 a.m. PT
to present the company's second-quarter results. Media and other interested
people may listen to the live broadcast at

    Forward-Looking Statement

    Certain matters in this news release, including statements with respect
to general economic and market conditions, demand for products, pricing
expectations, anticipated cost savings and capital expenditures, are forward
looking. These forward-looking statements reflect management's current views
and are based on certain assumptions including assumptions as to future
economic conditions, fibre availability, product pricing, production
flexibility and courses of action, as well as other factors management
believes are appropriate. Such forward looking statements are subject to risks
and uncertainties that may cause actual results to differ materially from
those contained in these statements, including those risks and uncertainties
identified under the heading "Risks and uncertainties" in the management's
discussion and analysis contained in Catalyst's first quarter 2008 interim
report available at www.sedar.com.

    %SEDAR: 00000638E

For further information:

For further information: Investors: David Smales, Vice-President,
Finance & CFO, (604) 247-4013; Media: Lyn Brown, Vice-President, Corporate
Relations, (604) 247-4713

Organization Profile

Catalyst Paper Corporation

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890