Resolute Q4 net loss soars to US$109 million on lower sales and closure costs

MONTREAL – Resolute Forest Products beat expectations even though its net loss soared to US$109 million in the fourth quarter due to costs related to the closure of several newsprint mills and lower sales.

The Montreal-based company, which reports in U.S. dollars, lost US$1.15 per share in the three months ended Dec. 31. That compared with a loss of $3 million or three cents per share a year earlier.

Sales decreased eight per cent to US$1.05 billion from $1.15 billion.

Excluding $131 million in one-time items, the pulp, paper and wood producer earned $36 million or 38 cents per share, well above the 21 cents per share forecast by analysts. Resolute earned $32 million or 34 cents per share in adjusted profits the final quarter of 2013.

Part of the costs related to the permanent newsprint plant closures at Iroquois Falls, Ont., and Baie-Comeau and Clermont, Que., the accelerated depreciation for the closure of a specialty paper mill and a writedown of a newsprint joint venture.

A weaker Canadian dollar offset the one-time costs by $27 million in the quarter and $98 million for the full year.

“The weaker Canadian dollar certainly helps — it also helps mills that are not necessarily the lowest cost,” said chief financial officer Jo-Ann Longworth.

The company also saved up to $4 million last quarter from lower fuel surcharges on goods shipped by truck and rail. An additional saving of $12 million to $15 million per year is expected from contractors who cut and truck logs to sawmills for each 10-cent-per-litre drop in diesel fuel prices.

Even though lumber prices fell towards the end of last year, CEO Richard Garneau said he was “cautiously optimistic” for 2015.

Lumber demand is improving with the recovery in U.S. housing starts and global pulp market fundamentals are good even though prices have fallen, he said. However, newsprint continues to be challenging due to falling demand.

For the full year, net losses were trimmed to US$277 million from $639 million on a five per cent drop in sales to US$4.3 billion. The 2013 results were affected by a $572 million non-cash income tax charge.

Adjusted profits were cut by more than half to $46 million or 49 cents per share, from $107 million or $1.13 per share.

On the Toronto Stock Exchange, Resolute’s shares closed at C$17.79, up 74 cents or 4.3 per cent on Thursday.