ABITIBI-PRICE MAINTAINS ITS BALANCE SHEET AND
CASH FLOW IN A TOUGH YEAR
TORONTO, Feb. 17 /PRNewswire/ -- Despite very soft markets and severe pricing pressures in 1991, Abitibi-Price maintained a healthy balance sheet and increased its cash position by $100 million. Cash flow was positively affected by the sale of non-strategic assets and a serious commitment to cost reductions and operating efficiencies. The debt to total capitalization ratio at Dec. 31, 1991 was maintained at a low 30 percent.
In 1991, the company reported a loss of $75.9 million or $1.12 per common share compared with a loss of $50.4 million or $0.76 per share in 1990 following a $5.8 million prior period adjustment. Sales for 1991 declined to $2.8 billion from $3.1 billion the previous year.
Unusual charges in 1991 totalled $44.4 million reflecting restructuring and downsizing costs throughout the company. Almost half of these charges related to the closure of a small paper coating operation in Georgetown, Ontario, and the idling of a newsprint mill in Thunder Bay, Ontario. Unusual charges in 1990 were $54.1 million.
The recession reduced consumption and continued oversupply depressed pricing for many of the company's products in the fourth quarter. Sales in that quarter were $652.1 million compared to $743.3 million in the same period in 1990. Unusual charges of $24.4 million taken in the fourth quarter resulted in a loss of $48.1 million or $0.70 per share compared with a 1990 loss of $34.7 million or $0.51 per share.
In its newsprint operations, the company achieved substantial operating improvements, basically bringing costs into line with reductions in production volume. However, as new mills across the industry became fully productive, and insufficient capacity was retired to offset this new production, prices declined.
Newsprint markets will remain poor in 1992, resulting in a need for further reduction in manufacturing costs.
The company's groundwood operations also experienced pricing pressures in 1991. However, demand was firm at the higher end of the product range, and these machines ran at or near full capacity. The Alma, Quebec, directory papers mill moved quickly to meet the recycling requirements set by the Yellow Pages Publishers Association calling for 10 percent recycled content by the end of 1992.
The distribution companies within the diversified group continued to be profitable during 1991 despite the tough economy. In the office products and industrial products divisions, new marketing strategies improved profitability, a trend which the company expects to continue in 1992.
The building products group suffered a small loss in 1991, as a result of severely depressed conditions in the U.S. housing market.
The operating loss at Provincial Papers, the company's coated papers operation, offset the slight operating profit earned by the rest of the company. Very soft markets have depressed prices and have hurt the excellent turnaround effort by the employees, who are producing consistently high-quality paper and finding cost reductions. The turnaorund of Provincial remains one of the company's top priorities.
The outlook for 1992 is for another difficult year, but the company recognizes that its healthy balance sheet and its commitment to ongoing cost improvements will position it for recovery when the economy improves.
Abitibi-Price, a world-class competitor in the forest industry, is a producer of newsprint, uncoated groundwood papers, coated papers and building products. The company is a major converter and distributor of paper and other information-related products.
(millions of Canadian dollars)
Periods Ended Three Months Year
Dec. 31 1991 1990 1991 1990
Net sales $652.1 $743.3 $2,800.5 $3,088.0
Cost of sales 607.2 682.0 2,493.6 2,684.5
Selling & admin.
expenses 49.8 68.0 233.7 264.0
depletion 28.3 28.2 113.1 113.3
Subtotal 685.3 778.2 2,840.4 3,061.8
(loss) (33.2) (34.9) (39.9) 26.2
Inc. (loss) from
inc. taxes (8.2) (2.8) (1.5) (9.4)
- long-term (9.0) (8.2) (35.0) (34.2)
- short-term (2.7) (5.2) (12.7) (21.6)
Unusual items (24.4) (11.5) (44.4) (54.1)
Other income and
expense - net (6.1) 4.1 4.0 13.8
Total (83.6) (58.5) (129.5) (79.3)
Inc. taxes 35.5 23.8 53.6 28.9
Loss for the year (48.1) (34.7) (75.9) (50.4)
on pfd. shares (0.4) (0.5) (1.7) (2.2)
shareholders $(48.5) $(35.2) $(77.6) $ (52.6)
Per common share:
Loss $(0.70) $(0.51) $(1.12) $ (0.76)
declared $0.125 $0.125 $0.50 $0.50
Weighted avg. no. of
outst.(millions) 69.3 69.3 69.3 69.3
/CONTACT: Robert G. Lawrie, senior vice-president, counsel, compliance and communication, 416-369-6761; or Eileen Mercier, senior vice-president and chief financial officer, 416-369-6718; or Robert J. Tait, manager, investor relations, 416-369-6789, all of Abitibi- Price/
(ABY) CO: Abitibi-Price ST: Ontario IN: PAP SU: ERN SB -- NYON4 -- 9698 02/17/92 23:03 EST