Resolute net income up 24%
By CNW Telbec
Feb. 7, 2014, Montreal - Resolute Forest Products Inc. reported net income, excluding special items ($746 million), of $107 million for the year ended December 31, 2013, up 24% compared to 2012, on sales of $4.5 billion, unchanged from prior year. Earnings per share, excluding special items ($7.88 per share), were $1.13, up 28% compared to 2012. GAAP net loss was $639 million in 2013, or $6.75 per share, compared to net income of $1 million, or $0.01 per share, in 2012.
In the fourth quarter of 2013, the Company reported net income, excluding special items ($35 million), of $32 million, or $0.34 per share, up 13% from the fourth quarter of 2012. GAAP net loss was $3 million in the quarter, or $0.03 per share, compared to a loss of $45 million, or $0.47 per share, in the fourth quarter of 2012. Sales were $1.2 billion, up 2% from the fourth quarter of 2012.
"In 2013, 45% of adjusted EBITDA came from our market pulp and wood products businesses," said Richard Garneau, president and chief executive officer. "Because of our diversified asset base, improvements in market pulp and wood products made up for a challenging year in paper grades. We've taken important steps to grow these businesses with acquisitions and investment commitments, while at the same time optimizing paper assets to maximize capacity utilization and margins. We also continued to focus on costs to improve earnings power."
Consolidated Operating Income Variance
The Company recorded an operating loss of $2 million in 2013, compared to an operating loss of $28 million in 2012. Lower overall pricing and shipments offset improvements in manufacturing costs ($30 million) and the weaker Canadian dollar ($40 million). Although pricing and volumes improved in wood products and market pulp, they were overshadowed by this year's market weakness in paper grades. Manufacturing costs improved because of the Company's asset optimization and mill restructuring initiatives and the effect of external power sales from new cogeneration facilities, offset in part by higher maintenance costs, higher fuel energy costs because of natural gas pricing and increased fiber costs. Overall shipment volumes rose compared to 2012, largely because of the acquisition of Fibrek Inc. in May of 2012. Closure costs, impairment and other related charges were $96 million lower due to the timing of asset optimization and mill restructuring initiatives. Selling, general and administrative expenses rose in the year ($17 million), largely because of credits recorded in 2012.
Compared to breakeven in the third quarter, operating income rose to $9 million in the fourth quarter. The average transaction price rose by 7%, or $26 per thousand board feet, but shipments slipped by 9% from the high levels recorded in the third quarter. The delivered cost remained stable, at $353 per thousand board feet. Finished goods inventory rose by 15% as a result of weaker demand in November.
Wood products generated operating income of $41 million in 2013, up $15 million from 2012. There was an 11% increase in average transaction price, or $37 per thousand board feet, and a 3% rise in shipments, both reflecting stronger market conditions as U.S. housing starts were 18% higher than 2012. The delivered cost increased by 8%, or $26 per thousand board feet, primarily because of log costs, due to higher stumpage fees and other costs associated with the comprehensive modification of the forest tenure system in the province of Québec, and lower internal wood chip selling prices.
Mr. Garneau added: "Based on the positive momentum of U.S. housing starts, we expect lumber pricing and shipments to hold near fourth quarter levels. But costs will remain under pressure because of lower wood allocation and the additional burdens imposed on producers with the province of Québec's comprehensive modification of the forest tenure system. Generally speaking, seasonality has a strong influence on costs, and this winter looks to be a particularly difficult one, not just in terms of energy but also because of weather-related constraints in our distribution network in Canada and the U.S., in addition to production disruptions at mills facing unusually harsh regional weather conditions, such as in the U.S. southeast."