Avenor - Weak market conditions in pulp and newsprint contribute to second quarter loss at Avenor.MONTREAL--(BUSINESS WIRE)--July 25, 1996--AVENOR INC inc - /ink/ increment, i.e. increase by one. Especially used by assembly programmers, as many assembly languages have an "inc" mnemonic. Antonym: dec. . (ME, TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). : AVR (Automatic Voltage Regulation) See voltage regulator. ) Avenor Av´e`nor n. 1. See Avener. announced today a net loss applicable to common shares for the second quarter ended June June: see month. 30, 1996, resulting from continued weakness in pulp markets and softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. conditions in newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been . The loss amounted to $15.5 million, or $0.23 per common share on operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of $24.7 million and sales of $529.4 million. This compares with net earnings applicable to common shares of $70.4 million, or $1.05 per share ($0.97 per share fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) for the corresponding period last year on operating earnings of $185.4 million and sales of $716.9 million. Continuing weak prices in the pulp business, lower shipments in the newsprint business, and higher costs as a result of market-related downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. , contributed to Avenor's lower operating earnings. Newsprint prices were down compared to the first quarter, although prices remained higher than the comparable quarter last year. For the first six months of 1996, Avenor reported net earnings applicable to common shares of $24.8 million, or $0.37 per share on operating earnings of $132.3 million and sales of $1,154.8 million. Net earnings applicable to common shares for the first six months of 1995 were $136.8 million, or $2.04 per share ($1.89 per share fully diluted) on operating earnings of $349.6 million and sales of $1,389.9 million. The $217.3 million decline in six month operating earnings is due primarily to lower volumes in the Newsprint and Pulp Groups compared to the same period in 1995 and to lower prices in all but the Newsprint Group. "With strengthening economies worldwide, demand for our products is expected to improve over the remainder of the year," said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. E. Gagne Gagne or Gagné is a surname, and may refer to:
MARKETS, OPERATIONS, OUTLOOK Newsprint Lower consumption and inventory drawdowns by major U.S. publishers combined to exert downward pressure on demand and prices for newsprint during the second quarter. Although still above last year's levels, second quarter North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. newsprint prices were down by approximately 11 percent relative to the average U.S. transaction price in late March of US$760 per tonne tonne measure of weight or mass; 1 tonne=1000 kg. See also ton. . Prices in overseas markets followed the same trend. For the second quarter, the Newsprint Group reported operating earnings of $39.8 million on sales of $217.1 million. This compares with operating earnings of $76.2 million on sales of $291.5 million for the corresponding period last year. Lower operating earnings for the Newsprint Group are primarily the result of substantially lower newsprint shipments due to weak markets. For the first half of 1996, the Newsprint Group had operating earnings of $139.4 million on sales of $540.8 million compared to operating earnings of $114.3 million on sales of $534.6 million for the same period last year. Costs per tonne increased 10 percent over the first half of 1995 primarily as a result of market-related downtime. During the second quarter, the Gatineau Gatineau, city, Canada Gatineau (găt`ĭnō), city (1991 pop. 92,284), SW Que, Canada, at the junction of the Gatineau and Ottawa rivers, adjoining Hull. newsprint mill took three weeks of downtime and the Thunder Bay Thunder Bay, city (1991 pop. 113,946), SW Ont., Canada, on Thunder Bay inlet of Lake Superior. The city was created in 1970 by the amalgamation of the twin cities of Fort William and Port Arthur and two adjoining townships. newsprint mill was shut down for two weeks in order to reduce inventories. During the third quarter, the Thunder Bay newsprint mill shut down for two weeks in July July: see month. . Inventories held by U.S. publishers are expected to return to normal levels towards the end of the third quarter, in line with the seasonal increase in newsprint consumption through to the end of the year. Pulp Production curtailments combined with improving demand, particularly in Asia, helped to reduce world pulp producer inventories during the second quarter. The Thunder Bay pulp mill A pulp mill is a manufacturing facility that converts wood chips or other plant fiber source into a thick fiber board which can be shipped to a paper mill for further processing. was shut down for four days, and the Gold River mill was shut down for four weeks, during the quarter. The Pulp Group reported an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $19.2 million for the second quarter on sales of $116.0 million compared to operating earnings of $50.3 million on sales of $193.1 million for the same quarter in 1995. For the first six months of 1996, the Pulp Group had an operating loss of $28.0 million on sales of $230.1 million compared to operating earnings of $114.7 million on sales of $407.3 million for the same period last year. Lower operating earnings for the first half of 1996 were the result of reduced shipments and weaker prices, as well as the $15.1 million inventory write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. taken in the first quarter. Overall costs per tonne, excluding the inventory write-down, have risen 2 percent over the first half of last year. The Thunder Bay pulp mill and the Gold River mill will be shut down for two weeks each during the third quarter in order to adjust inventories to market conditions. Demand and pricing for market pulp should improve over the remainder of 1996 given continuing steady growth in North American economies, together with some improvement in economic conditions in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . A
price increase for Northern Bleached Softwood softwoodTimber obtained from coniferous trees (mainly of the pine and fir families). With the exception of bald cypress, tamarack, and larch, softwood trees are evergreens. Kraft pulp (NBSK NBSK Northern-Bleached Softwood Kraft ) of US$60 per tonne to US$580 per tonne, effective July 1, is being implemented. White Paper Steady economic activity in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. during the second quarter resulted in inventories being drawn down by both producers and consumers. Inventories also declined in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . In late March and again in late April, price increases of US$88 per tonne each were implemented. Weaker market conditions and the normal seasonal slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. resulted in some price erosion towards the end of the quarter. Overall, prices improved by approximately 20 percent during the quarter. The White Paper Group reported second quarter operating earnings of $4.0 million on sales of $88.2 million compared with operating earnings of $44.8 million on sales of $116.3 million in the second quarter of 1995. For the first half of 1996, the White Paper Group had operating earnings of $23.4 million on sales of $188.0 million compared to operating earnings of $80.1 million on sales of $221.7 million during the corresponding period in 1995. After the normal slowdown in shipments over the summer, business conditions for the remainder of the year look promising for the White Paper Group. Demand is expected to improve and higher pulp prices should support further white paper price increases. Wood Products The lumber lumber, term for timber that has been cut into boards for use as a building material. The major steps in producing lumber involve logging (the felling and preparation of timber for shipment to sawmills), sawing the logs into boards, grading the boards according to market in Japan was flat in the second quarter of 1996 and was down compared to peak levels in the first half of 1995. Lumber prices remained stable during the second quarter as a result of a steady recovery in the Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and economy and a reduction of lumber production in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. due to a low demand for chips. Demand and prices remained stable in other world markets. Domestic sawlog The term sawlog refers to that part of a tree stem that will be processed at a sawmill. This is in contrast to those other parts of the stem that are designated pulpwood. The differences are that sawlogs will be greater in diameter, straighter and have a lower knot frequency. prices have improved during the second quarter, but overall remained lower than those realized during the same period in 1995. Pulplog prices appear to have bottomed out due to reductions in coastal pulplog inventories. The Wood Products Group reported second quarter operating earnings of $8.2 million on sales of $106.7 million compared to operating earnings of $22.6 million on sales of $116.0 million for the same quarter last year. Pacific Forest Products Limited, a 53 percent owned subsidiary of Avenor contributed $7.0 million to operating earnings for the second quarter of 1996 compared to $21.4 million for the same period last year. The Wood Products Group reported operating earnings of $11.8 million on sales of $195.9 million for the first six months compared to operating earnings of $55.0 million on sales of $226.2 million for the same period in 1995. Pacific Forest Products Limited contributed $9.4 million to operating earnings during the first six months of 1996 compared to a contribution to operating earnings of $52.5 million for the corresponding period in 1995. Steady demand and relatively stable prices should prevail for lumber in the Japanese market for the remainder of 1996 with prices expected to increase gradually in the fourth quarter. For the remainder of 1996, demand and prices for sawlogs are expected to soften due to increased log inventory levels. Pulplog demand is expected to improve slightly with some stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders of prices. Financing Activities During the second quarter, Avenor utilized $143.4 million of the funds held in the segregated account to repay US$55 million of the Senior Notes Series G, due June 1996, and to reduce a bank loan by US$50 million, thereby improving both debt levels and financing charges. As planned, the corporation also transferred another $25 million into the segregated account during the quarter. As of June 30, 1996, the segregated account had a cash balance of $275.9 million, which will be used to repay debt as opportunities arise. Under its Jan. normal course issuer bid the corporation repurchased and cancelled 441,000 common shares in the second quarter at an average price of $22.83 for an aggregate consideration of $10.1 million. This increases to 1.4 million the number of common shares repurchased in 1996, at an average price of $21.16 per share for a total consideration of $30.1 million. The corporation will continue to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares under this program as financial and market conditions permit. -0-
ADDITIONAL CONSOLIDATED FINANCIAL INFORMATION
STATEMENT OF EARNINGS
Second quarter The Year to date
3 months ended June 30 6 months ended June 30
(unaudited)
(in millions of dollars, except per share amounts and number of shares) 1996 1995 1996 1995 ______________________________________________________________ Sales $529.4 $716.9 $1,154.8 $1,389.9 Cost of delivery 47.8 51.7 95.8 108.9 Cost of sales 396.6 421.1 810.0 819.0 Amortization 39.5 40.4 80.2 78.8 Selling and administrative expenses 20.8 18.3 36.5 33.6 ______________________________________________________________ Operating earnings 24.7 185.4 132.3 349.6 ______________________________________________________________ Interest expense, net 28.2 32.9 55.2 66.6 Other expense 8.7 18.8 15.2 18.9 Income tax expense (recovery) (0.9) 54.2 28.0 106.9 Non-controlling interest 3.1 8.0 6.9 18.3 ______________________________________________________________ Net earnings (loss) (14.4) 71.5 27.0 138.9 Increase in equity component of convertible debentures, net of taxes (1.1) (1.1) (2.2) (2.1) ______________________________________________________________ Net earnings (loss) applicable to common shares $(15.5) $70.4 $24.8 $136.8 ______________________________________________________________ ______________________________________________________________ Net earnings (loss) per common share Basic $(0.23) $1.05 $0.37 $2.04 Fully diluted $ - $0.97 $ - $1.89 ______________________________________________________________ ______________________________________________________________ Weighted average number of outstanding common shares (in millions) 66.0 67.1 66.5 67.1 ______________________________________________________________ ______________________________________________________________
OTHER
Second quarter The year to date
3 months ended June 30 6 months ended June 30
(unaudited) (in millions of dollars) 1996 1995 1996 1995 _______________________________________________________________ Cash from operations $21.9 $152.0 $121.8 $303.1 Cash from (used in) investing activities (79.9) 208.8 (133.7) 195.6 Cash used in financing activities 36.3 121.3 185.1 148.0 Assets 3,388.9 3,314.1 Long-term debt 1,375.9 1,533.0 Shareholders' equity 1,324.1 1,146.1 Ratio of net total debt to capitalization (percent) 44.2 55.4 ______________________________________________________________ ______________________________________________________________ -0-
ADDITIONAL CONSOLIDATED FINANCIAL INFORMATION
SEGMENTED INFORMATION
SUMMARY OF SHIPMENTS
Second quarter The Year to date
3 months ended June 30 6 months ended June 30
(unaudited) 1996 1995 1996 1995
(in thousands of tonnes) ______________________________________________________________ Newsprint 225 311 532 615 Pulp 180 175 314 386 White paper 82 75 162 154 Wood products Logs (in thousands of m3) 209 244 422 410 Lumber (in millions of board feet) 98 83 185 164 ______________________________________________________________ ______________________________________________________________ SALES
Second quarter The Year to date
3 months ended June 30 6 months ended June 30
(unaudited) 1996 1995 1996 1995
(in millions of dollars) ______________________________________________________________ Newsprint $217.1 $291.5 $540.8 $534.6 Pulp 116.0 193.1 230.1 407.3 White paper 88.2 116.3 188.0 221.7 Wood products 106.7 116.0 195.9 226.2 Other 1.4 - - 0.1 ______________________________________________________________ Total $529.4 $716.9 $1,154.8 $1,389.9 ______________________________________________________________ ______________________________________________________________ OPERATING EARNINGS (LOSS)
Second quarter The Year to date
3 months ended June 30 6 months ended June 30
(unaudited) 1996 1995 1996 1995
(in millions of dollars) ______________________________________________________________ Newsprint $39.8 $76.2 $139.4 $114.3 Pulp (19.2) 50.3 (28.0) 114.7 White paper 4.0 44.8 23.4 80.1 Wood products 8.2 22.6 11.8 55.0 Other (0.1) (0.8) 0.2 (1.1) Corporate expenses (8.0) (7.7) (14.5) (13.4) ______________________________________________________________ Total $24.7 $185.4 $132.3 $349.6 ______________________________________________________________ ______________________________________________________________ -0- CONTACT: Avenor Inc. Denis Denis, king of Portugal: see Diniz. Aubin Au´bin n. 1. A broken gait of a horse, between an amble and a gallop; - commonly called a Canterbury gallop ltname>. , 514/846-5129 or Emmanuelle
or Dominique Dionne, 514/846-5061 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion