Catalyst Paper looking ahead in 2016
March 1, 2016 – Catalyst Paper has put measures in place for sustained improvement in 2016 as part of the financial losses suffered in 2015.
In the fourth quarter, the company incurred a net loss of $26.3 million and a net loss of $10.0 million before specific items. This compares to a net loss of $12.9 million and earnings of $8.4 million before specific items in the third quarter. As a result of the significant maintenance expenditures in the fourth quarter and the deposit of the countervailing duties to the U.S., free cash flow in the fourth quarter was negative $11.4 million.
Fourth quarter results were impacted by the completion of major planned maintenance outages of $17.4 million in addition to the impact of the imposition of countervailing duties on exports to the United States of supercalendered paper including associated legal fees and duties of $4.5 million.
Results for the Year
Consistent with Catalyst’s plans, the company moved from the integration and investment of its newly-acquired U.S. assets in the first half of 2015 to execution of its integrated business plan in the second half of the year. In the first half of 2015, the company reported negative EBITDA of $5.2 million compared to positive EBITDA of $53.9 million in the second half of the year.
The company recorded a net loss of $49.4 million and a net loss before specific items of $28.0 million in 2015. This compared to a net loss of $72.3 million and a net loss before specific items of $28.3 million in 2014. Free cash flow in 2015 was negative $37.6 million, compared to negative $17.2 million in 2014.
Adjusted EBITDA was negatively impacted by specific items of approximately $38 million, including the Rumford recovery boiler upgrade, the Crofton oxygen plant outage, significant second quarter market curtailments at the Rumford, Port Alberni and Powell River mills, as well as costs related to the imposition of countervailing duties on U.S. exports of supercalendered paper.
“The combination of strategic capital investments, market share growth, mill cost reduction programs, and product mix and optimization achievements, drove the step change in results in the second half of 2015,” said Joe Nemeth, president & chief executive officer. “The full implementation of these profit improvement programs is a key focus in 2016, and will provide the foundation for a sustainable improvement at Catalyst Paper.”
Catalyst ended 2015 with liquidity of $93.8 million, compared to liquidity of $86.2 million in the previous quarter.
In 2016, Catalyst is targeting further performance improvements in safety, productivity and costs by implementing its Revitalization Program at all of the company’s facilities. Work is underway at all facilities to develop safety programs and behaviours to achieve world-class performance.
The company expects that paper demand will decline in the first half of 2016 before rebounding in the seasonally stronger second half of the year. For NBSK pulp, Chinese buying patterns and requirements are expected to continue to drive the market in 2016.