By: The Globe and Mail
Resolute Forest Products Inc.’s stock price plummeted Thursday on declining sales and a larger-than-expected fourth-quarter loss.
The Montreal-based company’s shares were off 23 per cent – or $1.67 – at $5.60 in early afternoon trading on the Toronto Stock Exchange.
Sales fell 15 per cent to $894-million (U.S.) in the fourth quarter.
The loss for the quarter was $214-million or $2.39 per share, compared with a loss of $109-million or $1.15 per share in the year-earlier period.
Excluding special items, the loss was $26-million or 29 cents per share, compared with an adjusted profit of $35-million or 37 cents.
“The results are not what we would have hoped for,” Resolute president and chief executive officer Richard Garneau said in an interview, pointing to the negative impact of a total of $348-million in lower prices last year.
“In terms of cost-cutting we did everything we had to do,” said Mr. Garneau, an accountant by profession and notorious cost-cutter.
Volatility in currency markets has not helped, with a lower euro and Russian currency helping boost foreign competitors’ shipments to the United States and thus putting downward pressure on prices, he added.
Resolute is one of many forest products companies struggling with slumping global demand and weak prices.
Tembec Inc. said on Monday that it is indefinitely shutting its Senneterre, Que., sawmill, putting 148 people out of work.
Mr. Garneau said he’s confident of an improving outlook for two of Resolute’s three main markets – softwood lumber and pulp – while the company banks on a new tissue-paper venture to help offset declining newsprint sales.
“We’re confident that prices will rebound and we’re repositioning the company [with tissue paper],” he said.
Late last year, Resolute bought Florida branded and private-label tissue maker Atlas Paper Holdings for $156-million. That followed on the company’s $270-million investment to build a tissue-paper machine and converting operations at its pulp mill in Calhoun, Tenn.