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 Tembec reports financial results for its third quarter ended June 27, 2009
(Montreal, Quebec, Canada, July 30, 2009) Consolidated sales for the three-month period ended June 27, 2009 were $407 million, down from $609 million in the comparable period of the prior year. The Company generated a net loss of $38 million or $0.38 per share in the June 2009 quarter compared to a net loss of $27 million or $0.27 per share in the June 2008 quarter. Earnings before non-recurring items, interest, income taxes, depreciation, amortization and other non-operating expenses (EBITDA) was negative $42 million for the three-month period ended June 27, 2009, as compared to EBITDA of $9 million a year ago and negative EBITDA of $63 million in the prior quarter.
Business Segment Results
The Forest Products segment generated negative EBITDA of $18 million on sales of $72 million. This compares to negative EBITDA of $28 million on sales of $84 million in the prior quarter. Sales decreased by $12 million due to lower volumes for lumber. US $ reference prices for random lumber increased by approximately US $20 per mbf while stud lumber increased by US $18 per mbf. Currency had a negative effect on pricing as the Canadian $ averaged US $0.858, a 7% increase from US $0.803 in the prior quarter. The net price effect was an increase in EBITDA of $2 million or $15 per mbf. Mill level costs increased by $4 million as the Company continued to absorb higher costs resulting from significant production curtailments necessitated by poor demand for lumber. During the June quarter, the Company absorbed a charge of $2 million on the carrying value of logs and lumber inventories. In the prior quarter, the Company absorbed a charge of $7 million related to a reduction of the carrying value of logs and lumber inventories. During the June quarter, the Company incurred $1 million of lumber export taxes, unchanged from the prior quarter. Lumber export taxes are payable based on the 2006 agreement between Canada and the United States. Applicable export tax rates vary based upon selling prices. During the June quarter, the Company incurred a tax of 15% on Western shipments, unchanged from the prior quarter. On April 15, the tax on Eastern shipments increased from 5% to 15% as a result of an arbitration decision relating to alleged over-shipments of lumber between January 2007 and June 2007.
The Pulp segment generated negative EBITDA of $22 million on sales of $239 million for the quarter ended June 2009 compared to negative EBITDA of $51 million on sales of $223 million in the prior quarter. Sales increased by $16 million primarily as a result of higher volumes partly offset by lower selling prices. While US $ reference prices for North America NBSK and hardwood pulp declined, European softwood pulp prices actually increased. The pricing on the latter grade had dropped considerably below the North American price and it was expected that the gap would tighten at some point. Currency had a negative effect on pricing as the Canadian $ strengthened versus the US $. The net price effect was a decrease of $71 per tonne, reducing EBITDA by $25 million. Pulp demand remained weak and the Company incurred 86,200 tonnes of market related downtime and 1,400 tonnes of maintenance downtime. This compares to 182,600 tonnes of market downtime and 1,300 tonnes of maintenance downtime in the prior quarter. While market downtime remained significant, it was substantially lower than the record amount taken in the prior quarter. The higher productivity positively impacted mill level costs which declined by $71 million. The Company continues to focus on maintaining targeted inventory levels and will initiate production curtailments as required. Inventories were at 22 days of supply at the end of June 2009, as compared to 28 days at the end of March 2009.
The Paper segment generated nil EBITDA on sales of $109 million. This compares to EBITDA of $19 million on sales of $124 million in the prior quarter. The $15 million decline in sales was driven by lower newsprintrices. The US $ reference price for newsprint decreased by US $159 per tonne while the reference price for coated bleached board declined by US $17 per short ton. Currency also negatively impacted pricing as the Canadian $ strengthened versus the US $. The net effect was a decrease of $155 per tonne, decreasing EBITDA by $19 million. Manufacturing costs were similar quarter over quarter as the Company continued to reduce production in view of weak demand. The Company incurred 58,400 tonnes of market related downtime in the June 2009 quarter compared to 36,800 tonnes of market related downtime in the prior quarter. One of the three newsprint machines at the Kapuskasing newsprint mill was idle for the entire June 2009 quarter and the other two newsprint machines were idle for six weeks. The Pine Falls newsprint mill was idled for 10 days. The Temiscaming bleached board mill was also idle for 10 days during the most recent quarter.
Outlook
While the June quarterly operating results were an improvement over March, they remained poor. The strengthening Canadian $, the deterioration in the newsprint market and relatively weak pulp and lumber markets all combined to negatively impact financial performance. In response, the Company continued with selective production curtailments to manage and reduce inventories. This was a key factor in the Company's ability to maintain liquidity at $150 million, unchanged from the prior quarter. Looking ahead, lumber markets will remain challenging. European and U.S. pulp markets are weak, but are seeing some improvements in pricing, with continued production curtailments providing the impetus. Newsprint prices decreased in the June quarter and the economic downturn will continue to put pressure on prices and demand. Significant production curtailments will be required to see an improvement in newsprint pricing. Considering the ongoing challenges of the current operating environment and the effect on cash flow, the Company has placed a major emphasis on activities to maintain and enhance liquidity which currently stands at approximately $150 million, virtually unchanged from last quarter. Consequently, a number of liquidity enhancing initiatives have been launched with the target to raise a further $86 million over the next 12 months. Certain additional initiatives are also under evaluation at this time. These measures are necessary due to the volatility of the US $ and product prices. (Source: Tembec)
International Paper reports second-quarter earnings; profit falls; co. says worst of slowdown over
(Memphis, Tenn., U.S., July 30, 2009) International Paper (NYSE: IP) today reported preliminary 2009 second-quarter net earnings attributable to common shareholders of $136 million ($0.32 per share) compared with $257 million ($0.61 per share) in the first quarter of 2009 and $227 million ($0.54 per share) in the second quarter of 2008. Amounts in all periods include special items.
Earnings from continuing operations and before special items in the 2009 second quarter totaled $86 million ($0.20 per share), compared with $34 million ($0.08 per share) in the first quarter of 2009 and $235 million ($0.56 per share) in the second quarter of 2008.
Quarterly net sales were $5.8 billion in the second quarter compared with $5.6 billion in the first quarter of 2009 and $5.8 billion reported in the second quarter of 2008.
Operating profits in the 2009 second quarter were $788 million, up from $779 million in the first quarter of 2009 and $393 million in the second quarter of 2008.
"Over the course of this recession, International Paper has consistently demonstrated our ability to execute well despite the economic environment," said Chairman and Chief Executive Officer John Faraci. "Our performance in the second quarter once again generated solid earnings and strong free cash flow. We're also well ahead of our announced plans to pay down debt.
"When we look at global economic conditions today, it appears the worst is behind us. We have not seen any signs of sustainable progress in North America, but it appears demand has stabilized at lower levels. We are seeing improvement in Latin American paper markets and solid packaging demand growth in China. The good news is that mill and channel inventories are lean for both paper and containerboard, which positions us well for the eventual upturn in demand."
At the end of the 2009 second quarter, International Paper had $4.2 billion in cash and committed liquidity facilities. The company also generated $1.3 billion of free cash flow (cash provided by operations less capital expenditures) during the quarter, reflecting its continued focus on reducing capital spending, managing working capital and decreasing overhead spending, as well as cash received from alternative fuel mixture credits. The company also repaid $600 million of debt.
Segment Information:
Printing Papers had operating profits of $86 million compared with an operating profit of $101 million in the first quarter of 2009. Benefits from improved volume, input cost relief and strong operations were offset by higher annual maintenance outages, mix and pricing pressure in global paper and pulp markets.
Forest Products operating profits totaled $3 million, up from $2 million in the first quarter of 2009. The pending sale of 143,000 acres is expected to close in the fourth quarter of 2009, subject to the buyer's receipt of financing.
-- Company says worst of slowdown over:
International Paper Co. on Thursday reported a 40 percent drop in second-quarter profit but said the worst of the global recession appears to be over and that demand is steadying.
IP, North America's top cardboard box parts maker, has been leading peers in cutting production as the recession slashed demand. That strategy paid off as IP boosted its profit margin, generated $1.31 billion in free cash flow and paid down $600 million of debt during the quarter ended in June.
Net income totaled $136 million, or 32 cents per share, reflecting slightly lower sales and a slew of one-time charges. In the same period last year, IP earned $227 million, or 54 cents per share.
The latest results included restructuring charges from mill closures and reorganizations that totaled $244 million, as well as a big gain of $294 million from a federal credit for using alternative energy sources.
Quarterly sales edged down to $5.8 billion from $5.81 billion.
"When we look at global economic conditions today, it appears the worst is behind us," said CEO John Faraci. "We havnot seen any signs of sustainable progress in North America, but it appears demand has stabilized at lower levels."
He noted improvement in Latin American paper markets and solid packaging demand growth in China. Inventories are also lean for both paper and cardboard box material.
Before special items, the Memphis, Tenn.-based company earned $86 million, or 20 cents per share, compared with $235 million, or 56 cents per share, in the year-earlier period.
That beat Wall Street expectations for profit of less than a penny per share on sales of $5.75 billion.
Falling prices, especially outside the U.S., were a key drag on earnings, IP said.
The company's largest segment, industrial packaging, posted an operating profit gain of 36 percent to $255 million as stronger volume, lower input costs and more efficient operations offset falling selling prices.
Operating profits for the printing paper business fell 15 percent to $86 million as improved volume, input cost relief and strong operations were offset by higher annual maintenance outages, a less profitable mix of products and pricing pressure in global paper and pulp markets.
The company's consumer packaging unit recorded $38 million in operating profit, up 73 percent from a year before.
IP's distribution and forest products segments, its two smallest businesses, each had gains of about a third.
Besides paying off $600 million in debt during the second quarter, IP paid down another $600 million in July, reducing to $10.3 billion the $12.7 billion the company had a year ago from buying Weyerhaeuser Co.'s packaging business. (Source: Press rlease / The Associated Press)
Catalyst Paper Corporation - Q2 revenues show impact of further market declines
(Richmond, BC, U.S., July 30, 2009) Catalyst Paper (TSX:CTL) recorded a net loss of $1.9 million ($0.01 per common share) on sales of $291.5 million for the second quarter of 2009. That contrasts with net earnings of $21.0 million ($0.06 per common share) on sales of $352.5 million in the first quarter. Earnings were impacted by further deterioration in already extremely challenging market conditions across Catalyst's product lines, as well as by a strengthening Canadian dollar.
Catalyst posted a net loss before specific items in the second quarter of $25.6 million ($0.06 per common share), compared to net earnings before specific items of $8.6 million in the first quarter ($0.02 per common share). Specific items in the second quarter were restructuring costs and a foreign exchange gain on the translation of long-term debt. The company had an operating loss during the second quarter of $29.7 million, in contrast to operating earnings of $24.2 million in the preceding quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter were $6.1 million, down from $61.1 million in the first quarter; while EBITDA before specific items was $18.4 million, down from $65.3 million. Specific items consisted of restructuring costs, which were $12.3 million compared to $4.2 million in the first quarter. Free cash flow was negative $6.4 million compared to positive free cash flow of $35.9 million in the prior quarter.
"We are seeing a deep cyclical downturn in our industry as well as demand shifts and structural changes that will have a lasting impact on our business model," said Richard Garneau, president and chief executive officer. "Cost management and cash conservation is the key in the short-term. At the same time, it is essential that we continue to take steps that will make us competitive in a leaner and more agile industry in the future."
Catalyst curtailed 33 per cent of its paper and 100 per cent of its pulp production capacity in the quarter while leveraging machine flexibility to maximize returns on remaining production. All three paper machines at Elk Falls and NBSK pulp production at Crofton remained indefinitely idled throughout the second quarter and the Snowflake mill continued to take significant periods of curtailment. However the Crofton # 1 paper machine was restarted in late May to match production with customer orders.
Newsprint demand was impacted by weak advertising and circulation, and saw a 29 per cent year-over-year decline. Catalyst's specialty printing paper business was also impacted as weak retail advertising in particular resulted in reduced demand. Year-over-year demand declines amounted to 27 per cent for coated mechanical, 24 per cent for high-gloss, 17 per cent for standard-grade uncoated, and 24 per cent for directory. Oversupply in printing paper markets saw prices drop in the second quarter for all grades.
Demand for chemical pulp remained weak, although reduced inventories and continued purchases on the part of Chinese producers did result in a price improvement.
Responses to the liquidity pressures associated with lower production and declining prices included capital-spending restraint and pro-active cost management. Mill fixed costs were down $14.5 million from the previous quarter.
A combination of permanent reductions and indefinite layoffs - involving about 100 salaried positions - is in the process of being implemented at both the Richmond and Nanaimo offices, and at the Crofton and Elk Falls mills. Within the unionized workforce, implementation of plans aimed at achieving an $80/tonne benchmark continues at Powell River, Port Alberni and Crofton.
Catalyst also launched legal challenges in an effort to resolve the long-standing issue of unfair and excessive municipal property taxes. In light of this action, Catalyst made significantly reduced tax payments to the four municipalities involved. Based on the service consumption by class studies thatave been completed for each mill community, the payment of $6 million is still 1.7 times higher than the cost to the municipality to provide services to those mills. The first of the court hearings on this matter is expected to proceed in early August.
Subsequent to quarter-end, Powell River Energy Inc., in which Catalyst is a 50 per cent joint venture partner with Great Lakes Hydro Income Fund, raised $95 million of first mortgage bonds maturing in July 2016 to refinance $75 million of debt due July 24, 2009. This debt is non-recourse to Catalyst. After fees and expenses, the additional $18 million in funds will be distributed equally to the partners.
Catalyst is currently assessing alternatives to address the 2011 and 2014 maturity of its senior unsecured notes, with a view to reducing debt levels, interest costs and extending maturity dates. Following the announcement of this review, and in light of pulp and paper market conditions, Catalyst's credit ratings were adjusted downward by Standard Poor's and Moody's Investors Service.
No improvement in market conditions is expected through the remainder of 2009, although seasonal factors may diminish further demand erosion during the third quarter. A level of production curtailment consistent with that during the second quarter is foreseen for the third quarter. (Source: Catalyst Paper)
Clearwater Paper reports second quarter 2009 results
(Spokane, Wash., U.S., July 30, 2009) Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the second quarter ended June 30, 2009. The company reported net earnings for the second quarter of 2009 of $75.4 million, or $6.43 per diluted common share, compared to net earnings of $5.0 million, or $0.44 per diluted common share, for the second quarter of 2008. Net earnings for the second quarter of 2009, excluding income from alternative fuel mixture tax credits, tax benefits from renewable energy tax credits and a reduction in the valuation allowance related to state investment tax credits, and debt retirement costs, were $17.9 million, or $1.52 per diluted common share.
"Our results for the second quarter were very strong, driven by our excellent performance in our Consumer Products segment and improved results in Pulp and Paperboard, plus benefits from the alternative fuel mixture tax credits and other tax benefits that the company received. We continue to expect solid performance, but results for the rest of the year might be somewhat dampened by additional promotional expense, coupled with higher pulp and other commodity costs," said Gordon Jones, president, chief executive officer and director.
Second Quarter 2009 Segment Performance:
Pulp and Paperboard
Operating income for the second quarter of 2009 was $87.8 million, compared to operating income of $6.0 million for the second quarter of 2008. Excluding the income recognized for the alternative fuel mixture tax credits, operating income for the second quarter of 2009 was $11.4 million. Net sales of $174.4 million for the quarter were 6% lower than second quarter 2008 net sales of $185.1 million.
-- Lower net sales for the quarter were the result of an 8% decline in paperboard shipments, coupled with a 32% decline in market pulp net selling prices compared to the same period in 2008. Partially offsetting the negative comparisons were a 3% higher average net selling price for paperboard and significantly higher market pulp shipments to third parties.
-- Operating income for the quarter was favorably affected by lower input costs for wood fiber, chemicals, energy and freight compared to the same quarter in 2008.
-- Repair and maintenance costs were $2.5 million higher during the quarter compared to the same period in 2008, attributable to accelerating a portion of the scheduled major maintenance work into the first and second quarters of the current year due to softer-than-expected order backlogs. The remainder of the 2009 major maintenance for the segment is expected to occur in the third quarter at an estimated cost of $5.8 million. (Source: press release)
Catalyst Paper Q2 loss narrows
(Canada, July 30, 2009) Catalyst Paper (CTL.TO) posted a narrower second-quarter loss as it took cost-cutting measures and curtailed paper and pulp production capacity to address lower demand.
The pulp and paper maker posted a net loss of C$1.9 million, or 1 Canadian cent a share, down from a loss of C$124.3 million, or 34 Canadian cents a share, a year ago.
Excluding items the Richmond, British Columbia-based company posted a loss of C$25.6 million, compared with a loss of C$22.7 million, a year earlier.
Revenue fell 36 percent to C$291.5 million.
"We are seeing a deep cyclical downturn in our industry as well as demand shifts and structural changes that will have a lasting impact on our business model," Chief Executive Richard Garneau said in a statement.
Catalyst curtailed 33 per cent of its paper and 100 per cent of its pulp production capacity in the quarter, the company said.
"No improvement in market conditions is expected through the remainder of 2009," Catalyst said.
"A level of production curtailment consistent with that during the second quarter is foreseen for the third quarter," it said. (Source: Reuters)
RockTenn announces dividend
(Norcross, Ga., U.S., July 30, 2009) RockTenn today reported that its Board of Directors declared a dividend of $0.10 per share on its Class A Common Stock to shareholders of record at the close of business on August 11, 2009. The dividend, which will be paid on August 24, 2009, represents an annual dividend rate of $0.40 per share.
RockTenn (NYSE:RKT) is one of North America's leading manufacturers of paperboard, containerboard, consumer and corrugated packaging and merchandising displays, with annual net sales of approximately $2.8 billion. The Company operates locations in the United States, Canada, Mexico, Chile and Argentina. (Source: RockTenn)
Fitch affirms SSPBML ratings; outlook positive
(India, July 30, 2009) Fitch Ratings has today affirmed India's Shree Shyam Pulp & Board Mills Limited's (SSPBML) National Long-term rating at BBB(ind), its term loans of INR895.9m at BBB(ind), its fund based working capital limits of INR670.3m at "BBB(ind)" and its non-fund based working capital limits of INR200m (enhanced from INR50m) at "F2(ind)". The Outlook has been revised to Positive from Stable.
SSPBML's ratings are based on its adoption of an efficient manufacturing processes, close proximity of the production facility to raw material sources and high growth in paper consumption in India. The focus on operational efficiencies and product mix has resulted in consistently higher profitability and average realizations. Fitch notes that the high levels of operating and net profitability are also attributed to various incentives under the Industrial Policy 2003 for the state of Uttarakhand; the incentives are available for 10 years from the commencement of commercial production. SSPBML commissioned an additional capacity of 22000 Mt over FY08 and FY09; and is in the process of installing further capacity of 20000 Mt, to be operational in March 2010.
The Positive Outlook reflects SSPBML's ability to consistently increase it revenues while maintaining healthy profitability margins and a comfortable financial profile. The execution of recent significant capex plans and its ability to maintain existing levels of utilization on added capacity highlights its ability to execute and commission on-going capex on-schedule. An ability to execute on-going capex within time and cost estimates, and generate projected cash flows from new capacities would lead to a ratings upgrade. Increase in financial leverage owing to time-cost over-runs on its capex plans, and the non-availability of raw material resulting in adverse impact on operations could cause the Outlook to be revised to Stable.
SSPBML's revenues grew by 59.3% to INR2428m in FY09 y-o-y on the commissioning of new capacity. The company has been able to maintain its operating margins which stood at 32.1% in FYE09 (FY08: 33.1%). The financial leverage (total adjusted debt/EBIDTAR) has been moderate at 2.3x in FY09 (FY08: 2.9x). Fitch notes that actual capex in FY09 has been higher than company estimates given new capacity planned during FY09.
The ratings are constrained by the cyclical nature of the paper industry, the general slowdown in the economic environment, its relatively small size of operations and limited focus on branding. The company is exposed to risks related to raw material availability due to seasonality and fluctuation in sugarcane production, and alternate uses of bagasse. This risk is however mitigated to some extent as the company has adopted flexible manufacturing processes. Capacity utilization has remained moderate at about 78% in FY09; the company expects to improve the utilization levels through de-bottlenecking. Strong operating cash flows have resulted in financial leverage remaining within moderate levels in the last four years. However, Debt/Equity stood at 1.3x in FY09.
SSPBML was incorporated in 1994 and is engaged in manufacturing of writing and printing paper. It has a production facility at Kashipur (Uttrakhand), and auxiliary facilities for coal/agri-residue-based captive power generation and chemicals recovery. It has an annual production capacity of 80000 MT for various grades of paper. The company has obtained coal linkage from Central Coalfields, Ranchi for its captive power plant. (Source: Reuters)
Event: Paper Middle East exhibitors go with the flow
(Dubai, July 30, 2009) Egypt is becoming a force in the Middle East and beyond, with rapid growth in population (now more than 80 million and rising at 2%/yr) and in the economy, which gained 7% last year to achieve per capita GDP of $5400. Paper, Board and Tissue there have responded to the bonanza with new mills and a growing demand.
Furthermore, the strong paper growth throughout the Middle East and North Africa markets which was generating billions of dollars in the region with growth of 20% compared to the international growth rate which is between 2% and 6%.
As a mirror of the Middle Eastern paper market, Paper Middle East 2009 will show all the paper picture of the Middle East & Africa countries that has seen particularly dynamic development in the recent times.
The Globe of paper industry is coming to Egypt and we invite Visitors from all around the world to attend Paper Middle East Exhibition 2009, Register Now at www.papermideast.com
All enquiries regarding the exhibition can be made to Mrs. Fatma Ali at paper@nilefairs.com (Source: press release)
ABB wins five-year contract in SA
(Switzerland, July 2009) Leading power and automation technology group, ABB, has signed an agreement with Sappi to manage maintenance operations at its Kraft Mill in Cape Town.
The ABB full service agreement covers a five-year period, and is the first agreement of its kind for the company in the South African pulp and paper industry. Under the agreement it will cost-effectively develop the plant's maintenance operations and help to increase production efficiency.
"At Sappi we consider operational efficiencies as a strategic imperative," said Jonathan Hermanus, GM, Sappi Cape Kraft Mill. "The agreement allows the proven ABB methodologies to be implemented at Sappi Cape Kraft. The agreement also allows for the affected staff to improve their personal competencies in a leading technology company."
A selection of the Sappi employees ABB has taken under its wing
Sappi is the world's largest producer of coated fine paper and chemical cellulose, with over 17 000 employees on four continents and customers in over 100 countries. Sappi produces 6,9 million tonnes of paper and 3,5 million tonnes of pulp a year. Sales were US$5,9 billion in 2008. Sappi has four paper mills in the USA, ten in Europe and six in South Africa, plus two pulp mills in southern Africa. (Source: press release)
Metso supplies power boiler to SAICA in Spain
(Helsinki, Finland, July 30, 2009) Metso will supply a power boiler to S.A Industrias Celulosa Aragonesa's (SAICA) new waste-to-energy power plant at Zaragoza in Spain. Start-up for the plant is scheduled for the third quarter of 2011. The value of this order is approximately EUR 50 million. The order is included in Energy and Environmental Technology's Q3 orders revised.
The power boiler will be a 150 MW (thermal capacity) multi-fuel boiler using Metso's circulating fluidized bed technology and high-performance flue gas cleaning system, giving the new plant very high environmental performance. With this investment SAICA will minimize their landfill operations and instead recycle their paper mill waste into electrical power.
SAICA is Spain's largest paper producer with a production capacity of 2 million tons/year of corrugated paper. SAICA is also the largest paper recycler in Spain, using recovered paper for papermaking. At present the company recycles 2.2 million tons of paper per year which otherwise would go to dump. (Source: Metso)
Voith Paper: Burgo Group aims at increased efficiency on Sora PM 1 with a new OnQ ModuleSteam steambox
(Heidenheim, Germany, July 30, 2009) Burgo Sora ordered an OnQ ModuleSteam steambox from Voith Paper Automation. With a steam width of 3,930 mm, the OnQ ModuleSteam steambox is going to be installed in the DuoSuction NipcoFlex press. Wood-free coated paper with a basis weight range of 90-130 g/mē is manufactured on the PM 1 in Sora, Italy. This steambox in the press section will allow for increases in dryness and an improved moisture profile.
In cooperation with Burgo Group's Technology and Investment department, Voith Paper experts, with their extensive process knowledge, determined the optimum working point for this application of the steambox. A key advantage of Voith's proposal for Burgo was represented by the OnQ Profilmatic control software, whose control algorithms react optimally to a wide variety of process-specific factors. This way, the goal of the Burgo Group to design production as efficiently as possible will be met.
Voith Paper engineers have recently optimized the design of the OnQ ModuleSteam which uses an improved steam valve. OnQ ModuleSteam is therefore now an integral and leading part of the "Perfect Fit" portfolio of product solutions by Voith Paper Automation.
With 21 production lines in 13 paper mills the Burgo Group is at present the main producer of graphic paper in southern Europe. The Burgo Group has a capability to produce around 2,800,000 t/year of coated paper, base paper and newsprint. 85 percent of total output comprises the Group's specialties of CWF (Coated Woodfree) and CMR (Coated Mechanical Reels) grades for magazines, catalogues, inserts and other commercial print products. The Sora paper mill was constructed in 1963 and is located on the banks of the river Fibreno. The plant is specialized in double and triple coated woodfree paper. The mill has received FSC and PEFC forest certifications. (Source: Voith Paper)
Pulp mills in the US South had some of the lowest wood fiber costs in the world in the 2Q/2009
(Seattle, U.S., July 29, 2009) The US South has the largest pulp industry in the world and this industry has enjoyed low wood raw-material costs for a very long time. This trend continued in 2009, with wood chip and pulpwood costs that were substantially lower than global average costs, according to the Wood Resource Quarterly.
Weak pulp markets and reduced demand for wood fiber resulted in lower costs for wood chips and pulpwood in practically all regions of North America in the 2Q/09. This is the fourth consecutive quarter that wood fiber prices have fallen, with the biggest reductions occurring in Western US and Western Canada. In the US South, which is the biggest wood fiber consumer in the world, pulp mills have only experienced minor downward price adjustments in recent months.
The wet spring in the US South resulted in reduced logging and many pulp mills have seen their log inventories fall to unusually low levels. Fortunately for timber buyers, demand for logs from sawmills, OSB mills and pulp mills has been lower than usual and there has not been much upward price pressure on logs so far this year. Many sawmills and OSB mills have chosen to reduce production rather than pay more for logs to be able to run at high operating rates. Pine pulpwood fell seven percent in the 2Q as compared to the previous quarter and the average hardwood pulpwood prices were down about 10%, as reported in the North American Wood Fiber Review.
In the 2Q/09, the Southeastern US (the Atlantic States) had the lowest conifer wood fiber prices in North America. This region has consistently had among the lowest wood costs in North America during the past 15 years. Currently, softwood pulp producers in the states of Georgia, North and South Carolina have some of the lowest wood fiber costs in the world, according to the Wood Resource Quarterly. This is one reason why there have been fewer pulp mill closures and less market related downtime in the Southeast as compared to regions with higher wood costs such as Eastern Canada, the Lake States and the US Northeast.
Softwood fiber prices in Southern US are currently almost 20% lower than the Global Average Softwood Price Index, while hardwood fiber prices are nearly 30% below the Global Average Hardwood Price Index. With no signs of an imminent improvement in the markets for lumber, pulp or paper, it is not expected that wood fiber costs will increase much, if at all, during the remainder of this year. (Source: press release)
Sappi: Results for the third quarter ended June 2009; basic loss per share for the quarter 12 US cents vs. 17 US cents in 3Q/08
(Johannesburg, 30 July 2009) I. Highlights:
-Net cash generated US$106 million
-Good progress on debt refinancing
-Global economy remains weak
-Production curtailed in all regions to match supply to demand
-Stronger Rand impacts SA margins unfavorably
-Basic loss per share 12 US cents
-Acquisition synergies on track
II. Summary:
The quarter under review: Commenting on the results, Sappi chief executive Ralph Boettger said:
"Strong cash generation of US$106 million was a feature of our results for the quarter and benefited from management's actions to reduce working capital and limit capital expenditure to essential items.
Global economic conditions remained depressed in the quarter resulting in continued weak conditions in most of our coated paper markets. Conditions in pulp markets, including the chemical cellulose markets, improved significantly in terms of both demand and US Dollar prices, late in the quarter.
Globally our sales increased marginally on the prior quarter but were 3% down on the equivalent quarter last year, despite the additional capacity from our European acquisition earlier in the year.
Average selling prices realized by the group for the quarter were approximately 9% lower than average prices realized a year ago. We continued to match our supply to demand and manage our inventory levels by curtailing production during the quarter.
Prices of our inputs continued to reduce and had a favorable effect on variable costs during the quarter, in most regions. Our actions to manage raw material usage had a further favorable effect.
Operating loss excluding special items was US$13 million for the quarter, an improvement on the loss of US$ 17 million in the prior quarter and compares with a profit of US$88 million a year ago.
Our European business returned to profitability, excluding special items, as a result of the ramp up of synergy achievement and cost reduction, despite poor operating levels. The North American business improved its performance and its run rate by the end of the quarter had returned to operating profitability excluding special items. The Southern African business was impacted by the strengthening of the Rand relative to the US Dollar, weak domestic demand and low pulp prices in the quarter, resulting in an operating loss excluding special items.
The basic loss per share for the quarter was 12 US cents compared to a loss of 17 US cents in the equivalent quarter a year ago."
Looking forward, Boettger commented:
"Although global economic conditions remain weak we have seen improvement in pulp markets and some of our coated graphic paper export markets. In addition, inventory reduction in the coated graphic paper supply chain has largely run its course and we have started seeing order levels closer to end use demand levels. We also expect demand, particularly for reels, to strengthen during the next quarter which is historically the seasonally strongest quarter, and for our operating rates to improve in Europe and North America.
The chemical cellulose market improved markedly during our third financial quarter in terms of both demand and pricing. Sappi Saiccor Mill is responding by ramping up its production following the 30% capacity expansion commissioned last September, and expects to achieve close to full capacity by our financial year end and improve sales volumes during the next quarter as production increases.
Other factors which are expected to improve results are the achievement of further alternative fuel tax credits in North America of approximately US$40 million which will be reported as a special item, subject to continued availability under US law, accelerated synergy achievement in respect of the European acquisition integration, the benefits of fixed and variable cost reduction action and potential for some further input price reduction realization.
Against this background, we expect to return to operating profitability excluding special items during the next qarter. Cash generation is expected to be positive for the quarter.
We will continue to focus on cash generation and debt reduction. We expect capital expenditure for the full year to be less than US$200 million and to continue to carefully manage capex at that level in order to prioritise debt reduction." (Source: press release)
Mercer International Inc. reports 2Q/09 operating loss of EUR 9.7 million
(New York, July 29, 2009) Mercer International Inc. today reported results for the second quarter ended June 30, 2009. Total revenues in the quarter and Operating EBITDA decreased to EUR 158.9 million (U.S.$216.5 million) and EUR 3.9 million (U.S.$5.3 million) from EUR 176.7 million (U.S.$276.1 million) and EUR 19.8 million (U.S.$30.9 million), respectively, in the same period last year as pulp markets continue to be affected by recessionary economic conditions.
Summary Financial Highlights:
President's Comments
Mr. Jimmy S.H. Lee, President and Chairman, stated: "While global economies remain in recession and pulp prices were generally weak, we saw a stabilizing trend during the latter part of the quarter as record restocking by Chinese buyers and production downtime throughout the industry helped reduce global pulp inventories from peak levels earlier in the year. The Pulp and Paper Products Council recently reported that world pulp producer inventories for bleached softwood kraft pulp have fallen to approximately 26 days. List prices also improved in most markets in the quarter with the NBSK price in Europe rising from a low of $580 per ADMT in April to $630 per ADMT at the end of June. Additionally, producers have announced further price increases of about $70 per ADMT for July and August, bringing the NBSK price in Europe to $700 per ADMT. Offsetting this upward movement however has been the weakening of the U.S. dollar which decreased by about 5.4% and 7.8% versus the Euro and Canadian dollar, respectively, during the quarter."
Mr. Lee continued: "In June the Canadian government announced a C$1 billion aid program aimed at supporting energy efficiency and environmental performance capital programs at Canadian pulp and paper mills. The amount of funding is to be based upon the quantity of black liquor produced by a mill in 2009. Although no specific rules for the program have been released, we currently believe that our Celgar mill will be eligible for significant capital expenditure grants and thus are reviewing the mill's various energy and environmental initiatives, including the ?green' energy project, with a view to realizing on the opportunities under the program."
Mr. Lee added: "Earlier this month we commenced an exchange offer for our outstanding 8.5% convertible notes to improve our capital structure by reducing our debt and interest expense levels. In the quarter we also negotiated the refinancing of the revolving working capital facility of our Rosenthal mill which matures in February 2010, with a new EUR 25.0 million replacement revolving facility set to mature in December 2012 and a four-year amortizing EUR 4.4 million term loan. Subject to customary conditions, we currently expect to finalize both the new loan facility and the term loan sometime in the third quarter."
Mr. Lee concluded: "We currently believe that maintenance of inventories at the present lower levels will be key to further price recovery in the second half of the year and into 2010 and that additional production downtime by producers will be required as demand from China levels off."
Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008:
Pulp revenues for the three months ended June 30, 2009 decreased by approximately 13.5% to EUR 147.5 million from EUR 170.6 million in the comparative period of 2008, primarily due to lower prices resulting from continued weak pulp markets. Revenues from the sale of excess energy increased by approximately 86.9% in the second quarter to EUR 11.4 million from EUR 6.1 million in the same quarter last year as our German mills continue to benefit from the higher biomass energy tariffs implemented at the beginning of the year.
Pulp production decreased to 349,129 ADMTs in the current quarter from 356,819 ADMTs in the same quarter of 2008, primarily due to unscheduled production downtime at our Celgar mill. We took three days of scheduled maintenance downtime in the secondquarter of 2009 compared to 11 days in the same period of 2008.
Pulp sales volume increased to 395,378 ADMTs in the current quarter from 347,259 ADMTs in the comparative period of 2008 primarily as a result of strong sales to China. Average pulp sales realizations decreased by approximately 24.3% to EUR 367 per ADMT in the second quarter of 2009, compared to EUR 485 per ADMT in the same period last year.
Overall, our fiber costs decreased by approximately 16.0% in the second quarter of 2009 from the same period in 2008. Fiber costs at our German mills continue to be lower as a result of the continuing weak demand from the European board industry. At our Celgar mill fiber costs are benefiting from efficiency improvements made to the mill's woodroom and other fiber initiatives. As we move into the second half of the year, we currently expect that fiber prices will level off with some upward pressure in pricing for our German mills due to the effect of extensive harvesting curtailments on fiber supply.
During the second quarter of 2009, our pulp inventories decreased by approximately 36.2% to EUR 26.1 million from EUR 40.9 million at the end of the prior quarter, primarily as a result of higher sales volume. Our raw material inventories decreased to EUR 21.0 million in the current quarter from EUR 26.5 million at the end of the first quarter of 2009.
For the second quarter of 2009, we recorded an operating loss of EUR 9.7 million compared to operating income of EUR 6.2 million in the comparative quarter of 2008, primarily due to lower price realizations which were partially offset by a stronger U.S. dollar in the period versus the Euro and the Canadian dollar.
Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008:
Pulp revenues for the six months ended June 30, 2009 decreased to EUR 276.6 million from EUR 349.7 million in the comparative period of 2008, primarily due to lower prices resulting from challenging pulp market conditions. Revenues from the sale of excess energy increased to EUR 21.9 million from EUR 13.8 million in the same period last year.
Operating EBITDA was EUR 4.9 million in the first half of 2009 compared to EUR 52.6 million in the six months ended June 30, 2008. Operating EBITDA has significant limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. See the discussion of our results for the second quarter of 2009 for additional information relating to Operating EBITDA and page 7 of the financial tables for a reconciliation to net income (loss) attributable to common shareholders.
We reported a net loss attributable to common shareholders for the first half of 2009 of EUR 50.8 million, or EUR 1.40 per basic and diluted share. In the first half of 2008, we reported net income attributable to common shareholders of EUR 3.7 million, or EUR 0.10 per basic and diluted share. (Source: press release)
Portucel H1 net profit down 38 percent
(Lisbon, Portugal, July 29, 2009) Portuguese paper and pulp maker Portucel's (PTI.LS) posted on Wednesday a 38 percent fall in its first-half net profit due to a drop in pulp sales and increased capital expenses, but was in line with market expectations.
Portucel said in a statement that net profit fell to 47.1 million euros, while revenue dropped almost 10 percent to 537.5 million euros.
The company added that paper sales grew 3.8 percent, but pulp sales continued to reflect a drop in demand which started in the first half of 2008 and gained pace in the final quarter of that year due to the global economic crisis and resulted in a sharp downturn in prices.
A 135 percent jump in capital expenditure to almost 250 million euros, mainly on Portucel's new paper mill in Portugal also pressured the bottom line.
Earnings before interest taxes, depreciation and amortization (EBITDA) slumped 34 percent to 99.1 million euros.
Analysts surveyed by Reuters had forecast net profit of 47 million euros, revenues of 526 million euros, and EBITDA of 109 million euros. (Source: Reuters)
Potlatch reported second quarter results
(U.S., July 29, 2009) Potlatch Corporation reported financial results for the second quarter ended June 30, 2009 and announced that it has entered into a $50.2 million timber deed agreement to sell 50,700 acres of pre-merchantable timber to Forest Investment Associates L.P. (FIA).
"We made progress on three key initiatives during the quarter, in spite of the challenging market conditions," said Michael Covey, chairman, president and chief executive officer of Potlatch Corporation. "We significantly improved our balance sheet, as Clearwater Paper deposited $106.3 million of cash with the trustee for the credit sensitive debentures that will be used to retire the debt when it matures in December. In addition, we recently entered into a $50.2 million timber deed sale that we expect to close later in Q3 which will further improve our balance sheet and provide additional liquidity. Finally, we made solid progress improving the performance of our wood products business during the quarter," concluded Mr. Covey.
"Looking ahead, harvest levels for the remainder of 2009 are dependent to a large degree on pricing and demand. In May 2009, we announced a reduction in the planned sawlog harvest, primarily in Idaho, of approximately 500,000 tons, or 18 percent of the planned 2009 sawlog harvest. Selling high quality sawlogs at current prices is not in the best long-term interest of our shareholders. Current markets for softwood lumber remain depressed, which has applied downward pressure on log pricing across the country, especially in the West. We believe these markets will come back at more favorable prices when the housing market recovers, at which time we will increase harvest levels.
"Regarding our Real Estate segment, we continue to see interest in our HBU and rural recreation properties as evidenced by the consistent number of sales transactions from quarter to quarter. In addition, the demand for non-strategic timberland remains relatively high, with the Arkansas timber deed transaction as an example. Our Wood Products business will likely continue to experience weakness through the remainder of 2009, but we believe the worst is behind us. We will continue to closely monitor raw material and other costs in order to successfully compete in these depressed markets," concluded Mr. Covey. (Source: press release)
MWV 2Q earnings up on alternative fuel tax credits
(Stanford, U.S., July 29, 2009) MeadWestvaco Corporation reported positive second quarter earnings with year-over-year profit growth in the majority of the company's business segments despite lower overall demand. The results reflect the company's continued execution of its transformation strategies to deliver consistently higher returns for shareholders by participating in profitable packaging and other markets, reducing overhead costs and improving the overall operating productivity of its manufacturing facilities and supply chain. The results also reflect the benefit from alternative fuel mixture credits reported in other income.
"Our deliberate strategic actions to generate higher returns for shareholders are working," said John A. Luke, Jr., chairman and chief executive officer. "We are encouraged by the positive results we delivered during the second quarter in what remains a very difficult environment, and expect an even more significant impact from the intentional execution of our strategy when the economy improves."
Luke continued, "We are increasing the value we deliver to shareholders by making disciplined choices about our participation in key markets, and by strengthening our business model with permanent cost reductions and ongoing operating productivity. In conjunction with our priority emphasis on innovative solutions and growth in emerging markets, these efforts are helping us continue to deliver on our commitments - and shape the direction of our company for the future."
Quarterly Comparison
Second quarter 2009 net income was $125 million, or $0.72 per share, compared to $56 million, or $0.33 per share, in the second quarter of 2008. The results for the second quarter of 2009 include after-tax income of $112 million, or $0.65 per share, from excise tax credits earned under 2007 legislation enacted to provide a tax credit for companies that use alternative fuel mixtures to produce energy to operate their businesses. The results for the second quarter of 2009 also include after-tax restructuring charges of $25 million, or $0.15 per share, primarily related to employee separation costs and facility closures. The results for the second quarter of 2008 include after-tax restructuring charges of $6 million, or $0.03 per share, primarily related to employee separation costs and facility closures, and an after-tax gain of $9 million, or $0.05 per share, related to a sale of corporate real estate.
Packaging Resources
In the Packaging Resources business, profit from continuing operations was $49 million in the second quarter of 2009 compared to $54 million in the second quarter of 2008. Sales were $614 million in the second quarter of 2009 compared to $674 million in the second quarter of 2008. Price and mix improvement, moderated input costs and strong operating productivity were more than offset by lower sales volume, higher unabsorbed fixed manufacturing costs associated with market- and maintenance-related downtime and unfavorable foreign currency exchange principally related to Rigesa, the segment's Brazilian operation.
As planned, in the second quarter of 2009, the segment took aggressive actions to match production with demand. These lower production levels reduced overall profit versus the prior year due to unabsorbed fixed overhead costs. In the second quarter of 2009, market- and maintenance-related downtime totaled 103,000 tons, of which 88,000 was in SBS grades and 15,000 was in Coated Natural Kraft (CNK). Increased shipments in beverage multi-pack paperboard were more than offset by modest declines in tobacco and liquid packaging paperboard and by more pronounced declines in grades that serve the food service and general packaging paperboard markets.
As part of MWV's transformation strategies to focus on higher value global paperboard packaging markets, the company made the decision in July to permanently remove approximately 200,000 tons of SBS paperboard capacity by shuttering the No. 2 pperboard machine at its Evadale, Texas, mill. The machine, which runs food service and general packaging grades, will fully cease operation by the end of the third quarter of 2009. As a result of this action, the company's remaining annual SBS paperboard capacity will be approximately 1.5 million tons.
Consumer Solutions
In the Consumer Solutions business, profit increased 14 percent to $25 million in the second quarter of 2009 compared to $22 million in the second quarter of 2008. Sales were $554 million in the second quarter of 2009 compared to $656 million in the second quarter of 2008. Strong volume growth in adherence healthcare packaging was more than offset by unfavorable foreign currency exchange and pronounced volume declines in personal care, as global spending for luxury items remained weak, and in media packaging, where the company's actions to exit low return business resulted in lower volumes. Volume declines in global beverage and tobacco packaging were modest.
Profit growth in the company's home and garden, beverage, tobacco and healthcare businesses more than offset declines in global personal care and media packaging. The segment is continuing to execute the company's transformation strategies and has announced the closing or restructuring of eight global manufacturing locations to maximize production efficiency and exit unprofitable product lines. In the second quarter, the company announced the restructuring of a primary plastics operation in Hemer, Germany, and the closing of its Wilmington, N.C., beverage plant.
Consumer & Office Products
In the Consumer & Office Products business, profit increased 15 percent to $31 million in the second quarter of 2009 compared to $27 million in the second quarter of 2008. Sales in the second quarter of 2009 were $234 million compared to $270 million in the second quarter of 2008. As expected, sales were lower due to the weak global economic environment, resulting in lower volumes of most products. Envelope products sales were particularly weak as financial services customers continue to significantly reduce direct mail offerings. Benefits from aggressive productivity actions, including the effects of previous facility closures and restructurings, and tight cost control, drove improved profit in the second quarter. The segment continues to be impacted by imports from Asia.
Specialty Chemicals
In the Specialty Chemicals business, profit increased 36 percent to $15 million in the second quarter of 2009 compared to $11 million in the second quarter of 2008. Improved productivity more than offset lower volume and higher unabsorbed fixed manufacturing costs associated with market-related downtime. Sales were $116 million in the second quarter of 2009 compared to $146 million in the second quarter of 2008. Strong global demand for asphalt solutions and increased sales of automotive carbon in China were more than offset by lower global demand for industrial performance chemicals and decreased North American demand for automotive carbon.
Outlook
Given continued worldwide economic uncertainty, results for the second half of 2009 are difficult to predict. MWV is directly addressing the uncertain economic environment by remaining focused on the key items within its control that are expected to maintain the company's solid financial position and maximize the company's performance. (Source: MeadWestvaco Corp.)
Tembec scheduled another 3 weeks of curtailment at Pine Falls
(Canada, Jul 30, 2009) Tembec has scheduled another 3 weeks of curtailment at its Pine Falls, Manitoba newsprint operation, as reported by ForestTalk.
The downtime will begin on August 4th and will run through to August 25th.
Pine Falls just restarted production after an extended period of downtime (6 weeks) that began on June 16th. (Source: ForestTalk)
Canfor Pulp plans to rebuild the recovery boiler at Northwood
(U.S., July 30, 2009) Canfor Pulp is planning to use the money it receives from the federal government's $1 billion pulp sector aid package to rebuild the recovery boiler at its Northwood pulp mill, ForestTalk reported.
Canfor Pulp is generating a list of other projects as well, which may include upgrades to turbo generators and reducing its reliance on fossil fuels like natural gas.
The financial assistance from the government aid package can only be captured by spending money on environmental and energy improvements during the next three years. Canfor, which employs about 1,300 workers at its three pulp mills in Prince George, is eligible for the subsidy calculated on the amount of black liquor the company produces.
The recovery boiler at the Northwood pulp mill the only recovery boiler among the company's facilities in Prince George that hasn't been upgraded as a low-odour recovery power boiler. (Source: ForestTalk)
Stora Enso transfers Eur 2 billion to its invested non-restricted equity fund
(Helsinki, Finland, July 29, 2009) The Finnish National Board of Patents and Registration gave its consent for Stora Enso Oyj to decrease its share premium fund by Eur 1 688 145 310.08 and its reserve fund by Eur 353 946 990.12. The funds will be decreased by transferring these respective amounts to the invested non-restricted equity fund, as the company reports.
The transfers were approved by Stora Enso's Annual General Meeting on 1 April 2009. (Source: Stora Enso Oyj)
Domtar to open pulp sales office in Hong Kong
(Hong Kong, July 29, 2009) Domtar today said that it is opening a market pulp sales office in Hong Kong, operating as Domtar Asia Limited, as of August 1, 2009.
"By establishing a physical presence in Hong Kong, we are solidifying our commitment to a dynamic and growing Chinese pulp market," said David Liang, vice president of Domtar Asia Limited.
"Not only will we be able to better serve our customers, through direct relationships and services, but we also have the opportunity to develop and grow our client base," Liang added.
Liang, who has several years of experience in pulp sales, will head the Domtar Asia Limited office, supported by a staff of three professionals.
The offices are located at Millennium City 1, 388 Kwun Tong Road, Kowloon, Hong Kong. (Source: Domtar)
Appleton to explore sale of C&H Packaging
(Appleton, WI, U.S., July 28, 2009) Appleton said that it intends to explore options to sell C&H Packaging Company, a wholly-owned subsidiary Appleton acquired in April 2003.
C&H Packaging is located in Merrill, Wisconsin, and prints and converts flexible plastic packaging materials for companies in the food processing, household and industrial products industries.
C&H employs approximately 100 people.
Appleton's chief executive officer, Mark Richards, said that Appleton intends to focus its performance packaging operations on film production. Appleton's film-producing facilities include American Plastics in Rhinelander, Wisconsin and New England Extrusion in Turners Falls, Massachusetts and Milton, Wisconsin.
Appleton said it is evaluating the impact that a potential sale of C&H Packaging will have on Appleton's financial statements; such impact could be material.
Appleton said that it can offer no assurances that a transaction will occur or, if one is undertaken, its terms or timing.
The company said it won't provide additional public comment about the progress or developments of this process unless its board of directors enters into a definitive sales agreement with a potential buyer. (Source: Appleton)
India: Pudumjee Pulp & Paper Mills Q1 PAT higher at Rs 2.61 crore
(Mumbai, India, July 29, 2009) Pudumjee Pulp & Paper Mills Ltd has announced the financial results for the quarter ended on 30-June-2009. The Net Sales was at Rs.6689 lacs for quarter ended on 30-June-2009 against Rs.8053 lacs for the quarter ended on 30-June-2008.
The Net Profit / (Loss) was at Rs.261 lacs for the quarter ended on 30-June-2009 against Rs.82 lacs for the quarter ended on 30-June-2008.
The company has reported an EPS of Rs.0.64 for the quarter ended on 30-June-2009 against Rs.0.21 for the quarter ended on 30-June-2008. (Source: Equity Bulls)
Voith Paper: Burgo Group aims at increased efficiency on Sora PM 1 with a new OnQ ModuleSteam steambox
(Heidenheim, Germany, July 30, 2009) Burgo Sora ordered an OnQ ModuleSteam steambox from Voith Paper Automation. With a steam width of 3,930 mm, the OnQ ModuleSteam steambox is going to be installed in the DuoSuction NipcoFlex press. Wood-free coated paper with a basis weight range of 90-130 g/mē is manufactured on the PM 1 in Sora, Italy. This steambox in the press section will allow for increases in dryness and an improved moisture profile.
In cooperation with Burgo Group's Technology and Investment department, Voith Paper experts, with their extensive process knowledge, determined the optimum working point for this application of the steambox. A key advantage of Voith's proposal for Burgo was represented by the OnQ Profilmatic control software, whose control algorithms react optimally to a wide variety of process-specific factors. This way, the goal of the Burgo Group to design production as efficiently as possible will be met.
Voith Paper engineers have recently optimized the design of the OnQ ModuleSteam which uses an improved steam valve. OnQ ModuleSteam is therefore now an integral and leading part of the "Perfect Fit" portfolio of product solutions by Voith Paper Automation.
With 21 production lines in 13 paper mills the Burgo Group is at present the main producer of graphic paper in southern Europe. The Burgo Group has a capability to produce around 2,800,000 t/year of coated paper, base paper and newsprint. 85 percent of total output comprises the Group's specialties of CWF (Coated Woodfree) and CMR (Coated Mechanical Reels) grades for magazines, catalogues, inserts and other commercial print products. The Sora paper mill was constructed in 1963 and is located on the banks of the river Fibreno. The plant is specialized in double and triple coated woodfree paper. The mill has received FSC and PEFC forest certifications. (Source: Voith Paper)
Voith Paper: Wepa Mainz PM 1 reaches record speed with TissueFlex D2
(Heidenheim, Germany, July 29, 2009) TissueFlex D2 has been instrumental in helping to achieve a top speed of 1,800 m/min on PM 1 at Wepa Mainz in Germany. Furthermore, average production speed was increased to 1,700 m/min and daily production of 175 tonnes was maintained.
PM 1 is a 5.30 m wide C-Wrap machine and was taken over by Wepa in 2006. Bathroom towel and creped hand towel at a grammage between 17-20 g/mē are produced at speeds up to 1,800 m/min.
The top speed of 1,800 m/min was reached on April 22/23, 2008 and held over 48 hours. TissueFlex D2 did not show any limitations under these conditions. The targeted dewatering capacity and the specific paper quality parameters were achieved.
Besides this success other goals were the increase of average production speed and daily production. TissueFlex D2 was vital to the success due to its outstanding energy-related performance. PM 1 can now be operated at constant level of steam pressure in the Yankee cylinder while the burner temperatures has been reduced. The base structure of the felt supports even pressure distribution and contributes to uniform cross paper profiles. The double layer baseweave construction with pyramidal batt structure was developed specially for this machine to build up the highest possible capillarity attraction and dewatering capacity. It also provides constant high dewatering capacity and is easy to clean over the felt lifecycle. Furthermore, the fast and effective response to high pressure cleaning ensures the highest possible performance by keeping the running parameters at a constant level leading to significant savings in water and energy. This reduces costs on PM 1 and is positive for the environment.
Several TissueFlex D2 felts have been used to date, all having been run to planned stops with life potential remaining and all having achieved repeatable performances relating to quality and energy savings.
Hans Dieter Schuhmacher, production manager at PM 1 summarizes the achieved results: "During recent years we ran tests on various designs in cooperation with Voith Paper Fabric & Roll Systems. TissueFlex D2 proved to be the most efficient felt type for our machine."
Since the 1990s Voith Paper Fabric & Roll Systems has worked closely with the production team on PM 1 to show our long-term partnership and cooperation built on trust. (Source: Voith Paper)
Canfor Pulp Limited Partnership second quarter numbers
(Prince George, BC, Canada, July 27, 2009) Canfor Pulp Limited partnership has announced its second quarter 2009 results.
The Partnership reported sales of $205.0 million and net income of $1.5 million, for the quarter ended June 30, 2009. That compares to sales of $212.6 million and a net income of $18.2 million for the same period a year ago.
The second quarter of 2009 was highlighted by a continued focus on cost control, working capital management and cash conservation in light of continued adverse market conditions. NBSK pulp US dollar list prices decreased further in the quarter and when combined with the stronger Canadian dollar represented a 10% decrease of list price in Canadian dollar terms.
Offsetting the lower overall pricing for the Partnership's pulp and paper products was a 10% decrease in unit manufacturing costs attributable to lower fibre, energy and chemical prices combined with focus on controllable costs through cost reduction initiatives and the management of discretionary spending. Working capital was reduced by $22.2 million in the quarter as finished goods inventories were reduced on increased sales into China. The reduction in working capital, and capital expenditures limited to $2.2 million, allowed the Partnership to increase its net cash position to $3.2 million as compared to a deficit of $15.6 million at the end of the first quarter of 2009.
Pulp markets improved in the second quarter as significant supply curtailments have mitigated reductions in global demand, resulting in reduced producer inventory stocks and price increases. NBSK US dollar list prices were US$635 in April rising to US$660 in June with announced prices for July of US$700.
During the second quarter of 2009 the Intercontinental and Prince George Pulp and Paper Mills completed scheduled maintenance outages resulting in reduced market pulp production of approximately 7,000 tonnes and reduced paper production of 3,000 tonnes. There are no planned maintenance outages for the third quarter of 2009.
For the remainder of the year there is a planned maintenance outage in the fourth quarter at our Northwood facility which is expected to reduce production levels by 21,000 tonnes.
The billion dollar Green Transformation Program announced by the Canadian government in June, proposes to provide a $0.16 per litre credit to qualifying Canadian facilities for black liquor consumption commencing January 1, 2009.
The program is to take the form of funding for qualifying energy and environmental capital projects.
The Partnership expects to qualify for funding under this program and has started developing a list of significant qualifying capital projects in anticipation of submission once the program details are finalized. (Source: press release)
Metso's Interim Review, January 1-June 30, 2009: profitability satisfactory; guidance for 2009 intact
(Helsinki, Finland, July 24, 2009) I. Highlights of the second quarter of 2009:
-- New orders worth EUR 1,020 million were received in April-June, i.e. 41 percent less than in the previous year (EUR 1,740 million in Q2/08).
-- At the end of June, the order backlog was 14 percent lower than at the end of December 2008, amounting to EUR 3,512 million (EUR 4,088 million at December 31, 2008).
-- Net sales decreased by 24 percent, standing at EUR 1,247 million (EUR 1,633 million in Q2/08).
-- Earnings before interest, tax and amortization (EBITA) were EUR 74.7 million, i.e. 6.0 percent of net sales (EUR 166.5 million and 10.2% in Q2/08).
-- Operating profit (EBIT) was EUR 65.9 million, i.e. 5.3 percent of net sales (EUR 155.2 million and 9.5% in Q2/08).
-- Earnings before interest, tax and amortization (EBITA) and operating profit (EBIT) in April-June, include some EUR 4 million in non-recurring expenses relating to capacity adjustment measures.
-- Earnings per share were EUR 0.26 (EUR 0.72 in Q2/08).
"The overall cautious market sentiment in our customer industries has continued - with the positive exception of the paper and board industry in Asia, where we have seen improvement in the past few months. The recovery in China is partly due to the implemented stimulus measures. So far it has resulted in several sizable orders for us, one of which has been included in our second quarter orders received and the rest are to be included later this year," says Jorma Eloranta, President and CEO of Metso Corporation.
"The order intake for our equipment and project business in the first half of the year was low, while the services demand remained reasonably stable and satisfactory. Our profitability also remained satisfactory. Our overall financial development for January-June as well as our updated estimates for the second half of the year support our earlier guidance for this year. Our financial position is also solid."
Eloranta notes that the overall market visibility for 2010 is weak. "We are prepared to take additional capacity adjustment measures when needed. Our Board has today decided not to pay any additional dividend for 2008. This is mainly due to the continuing general uncertainty on the markets. Our financial performance and financial position are stable and have developed according to our expectations. The importance of strong balance sheet increases in an uncertain economic climate."
-- Operating environment and demand for products in April-June:
Due to the decline of the global economy and the uncertainty in the financial markets, our operating environment continued to be demanding. Our customers were still cautious in their investment decisions, which particularly affected our equipment and project businesses.
The majority of mining companies have significantly cut their investment plans compared with the peak investment levels of previous years and continued to limit their production during the second quarter of the year. The positive development in mineral and metal prices over the first half of 2009 has so far failed to improve the demand. Due to our strong product and services offering and the significant increase in our installed equipment base, demand for our mining equipment and related services continued on a satisfactory level. In the construction industry, demand for equipment relating to aggregates production continued on a weak level. Many countries have introduced economic stimulus packages relating to infrastructure development. According to our estimates, these measures will improve the demand for construction industry products only in the longer term as much of the new capacity installed during recent years is currently under-utilized. Demand for our construction industry services business was satisfactory.
Demand for power plants utilizing renewable energy sources was satisfactory in Europe and North America. The demand for power plants utilizing biomass and waste is expected to iprove during the year due to measures to stimulate the use of renewable energy sources. However, limited availability of financing tends to delay the decision making in these projects. Demand for automation and flow control solutions decreased during the second quarter of the year. Demand for metals recycling equipment continued on a weak level due to the low price of scrap metal, customers' focus on inventory reduction and curtailments in steel production. The demand for the services business in our Energy and Environmental Technology segment was satisfactory.
Demand for paper and board lines picked up in China during the second quarter of the year. The recovery in the Chinese market was supported by the economic stimulus measures which have been implemented there. Fiber producers continue to postpone investment decisions due to low capacity utilization rates and uncertainty related to demand development. We have agreed to extend the schedules in a few additional smaller and medium size projects but in general the pressure to renegotiate the schedules has diminished. Demand for our services business in the pulp and paper industry continued to be weak particularly in North America and Europe due to low capacity utilization rates and capital spending restrictions. (Source: press release)
RockTenn reports record earnings for the third quarter of fiscal 2009
(Norcross, Ga., U.S., July 27, 2009) RockTenn (NYSE:RKT) today reported earnings for the quarter ended June 30, 2009 of $2.24 per diluted share. The Company's adjusted earnings were $1.44 per diluted share, excluding specific items related to the alternative fuel tax credit, debt extinguishment costs and other restructuring charges. Adjusted earnings per diluted share increased 106% over the prior year quarter adjusted earnings of $0.70 per diluted share.
I. Third Quarter Results:
- Net sales of $703.9 million for the third quarter of fiscal 2009 decreased $67.1 million over the third quarter of fiscal 2008.
- Segment income increased to $150.0 million compared to $67.3 million in the prior year quarter, a 123% increase over the prior year quarter. Segment income includes the alternative fuel tax credit of $32.7 million, net of expenses for the period from January 22, 2009 to June 30, 2009. This tax credit is scheduled to expire on December 31, 2009.
II. Chairman and Chief Executive Officer's Statement
RockTenn Chairman and Chief Executive Officer James A. Rubright stated, "Our adjusted earnings of $1.44 for the quarter and $3.42 for the nine months ended June 2009, reflect the very low cost positions we have achieved in our businesses and the economic resiliency of our food and consumer packaging based businesses. Total tons shipped were up 5.7% over the second quarter, reflecting the continued outperformance of our consumer and corrugated packaging operations. Although recycled fiber costs have continued to increase from the January lows, our other costs have remained low and paperboard and containerboard pricing have stabilized in recent weeks. Accordingly, we expect to continue to generate strong cash flows based on our proven operating model."
III. Segment Results
Paperboard and Containerboard Tons Shipped and Average Price
Total tons shipped in the third quarter of fiscal 2009 decreased by 38,642 tons over the prior year quarter but increased on a sequential quarter basis by 28,273 tons. The average selling price for all paperboard and containerboard grades decreased $2 per ton from the prior year quarter and decreased $22 per ton on a sequential quarter basis.
Consumer Packaging Segment
Consumer Packaging segment net sales declined 3.0% in the third quarter of fiscal 2009 compared to the prior year quarter, due to lower volumes partially offset by higher folding carton unit pricing. Segment income increased $55.1 million over the prior year quarter to $83.0 million due primarily to $32.7 million of alternative fuel tax credit and lower recycled fiber and energy costs, which were partially offset by higher chemical costs.
Corrugated Packaging Segment
Corrugated Packaging segment net sales decreased $22.4 million to $186.5 million in the third quarter of fiscal 2009, due to lower volumes. Segment income was $49.6 million in the third quarter of fiscal 2009 and segment return on sales was 26.6%.
Specialty Paperboard Products Segment
Specialty Paperboard Products segment net sales decreased $24.9 million in the third quarter of fiscal 2009 primarily due to decreased volumes and lower recycled fiber prices. Segment income increased $1.6 million to $9.4 million compared to the prior year quarter. (Source: RockTenn)
Paper company, California cities top "Green Power" list
(Washington, D.C., U.S., July 27, 2009) One of America's major paper goods manufacturers and four California governmental agencies are among the top five groups in the United States using electricity they generate themselves from environmentally friends materials.
Kimberly-Clark Corp. led a list of the top 20 organizations powered by their own "green power" released Monday by the U.S. Environmental Protection Agency.
The EPA ranked the paper company at No. 1 because of the nearly 193 million kilowatt hours of energy used to run Kimberly-Clark's facility in Everett, WA, that is generated on-site from waste produced in making paper pulp. The generated electricity represents more than 7 percent of the electricity the company would otherwise have to purchase around the United States.
The Los Angeles County Sanitation District ranked second, with 171 million kilowatt hours, about 54 percent of the district's total energy use. The source of the district's green energy was biogas produced by sludge digesters and landfills. The gas is burned to create steam that runs electric turbines, a process used by several of the Top 20 companies.
The city of San Diego produced 69 million kilowatt hours, or 27 percent of the city's energy needs to rank third. A water pollution control plant operated jointly by the cities of San Jose and Santa Clara was fourth with 52.7 million kWh. That plant generates 56 percent of the city's needs.
Cement maker CalPortland came in fifth with 50 million kWh. The company makes 11 percent of its need from wind.
Collectively, the top 20 companies produced and used more than 736 million kWh of on-site green power, which the EPA said was equivalent to the amount of electricity needed to power more than 61,000 homes.
Sources of green power also include solar, geothermal, biomass and low-impact hydropower.
The complete list can be seen at www.epa.gov/greenpower/toplists/top20onsite. (Source: press release)
Albany International announces closure of Portland, Tennessee, facility
(Albany, N.Y., U.S., July 27, 2009) Albany International Corp. (NYSE: AIN) announced today that it will discontinue operations at its forming fabric manufacturing facility in Portland, Tennessee. The plant closing is the result of the continuing consolidation of customers in the U.S. and Canada, accelerated by the economic recession, and the need to balance the Company's paper machine clothing (PMC) manufacturing capacity in North America with anticipated paper mill demand. Similar steps have been taken by the Company over the last few years in both Europe and North America, as the global paper and paperboard industry continues to shift capacity from traditional paper markets to new emerging markets.
This planned action is a business necessity, driven by existing and expected market conditions, and in no way reflects on the performance of the 156 affected employees, who will be offered severance and outplacement assistance.
Transition of forming fabric manufacturing from the Portland area to other facilities in North America will begin at once and will be supervised by technical and manufacturing personnel to ensure continuity of customer supply. The transition is expected to be completed by June 2010.
The Company expects that, with this action, its PMC manufacturing capacity in the Americas will be, for the foreseeable future, as follows: forming production for the Americas will be centered in Perth, Ontario, Canada; Menasha and Kaukauna, Wisconsin; and Indaial, Brazil; press production will be centered in St. Stephen, South Carolina; Cowansville, Québec, Canada; Indaial, Brazil; and Cuautitlan, Mexico, and dryer production in Cuautitlan. (Source: Albany International)
AkzoNobel appoints new Corporate Director Control
(The Netherlands, July 28, 2009) Hans de Vriese has been appointed as AkzoNobel's new Corporate Director Control. He will take up the position on September 1, 2009, the company reports.
A Belgian national, Hans (44) will join the company from General Motors Corporation, where he is Chief Financial Officer, General Motors Asia Pacific.
Hans brings to AkzoNobel a strong financial background, and experience, gained across a variety of financial positions within General Motors Corporation in Europe, the US and China. He holds a degree in Electromechanical Engineering and an MBA both from the University of Leuven, Belgium. (Source: press release)
Kruger Inc. to resume operations at its sawmills in the Mauricie region for eight weeks
(U.S., July 28, 2009) Kruger Inc. announced that it will resume operations at its Parent and Saint-Roch-de-Mekinac sawmills, as well as planing operations in Saint-Severin-de-Proulxville, for eight weeks, from August 3 to September 26, 2009. After that period, these operations will be idled indefinitely. As for forest operations, which had been scheduled to resume on July 31, 2009, after a nine-week stoppage, they will remain suspended indefinitely, except for transportation activities. The temporary resumption of sawmill, drying, planing and transport operations will see some 220 employees return to work for eight weeks.
Kruger Inc. came to these decisions due to persistently bleak market conditions, particularly the continuing weak demand for lumber and a strong Canadian dollar against the US currency.
Founded in 1904, Kruger Inc. is a major producer of publication papers, tissue, lumber and other wood products, corrugated cartons from recycled fibres, green and renewable energy and wines and spirits. The Company is also a leader in paper and paperboard recycling in North America. Kruger operates facilities in Quebec, Ontario, Alberta, British Columbia, Newfoundland and Labrador, in the United States and the United Kingdom and has 9,000 employees. (Source: press release)
Metso decides not to distribute the additional dividend for 2008
(Helsinki, Finland, July 28, 2009) Metso's Board of Directors has decided that Metso will not pay any additional dividend for 2008 in addition to the ordinary dividend of 0.70 euro per share that was distributed in April 2009, the company reported. Metso's financial performance and financial position are stable and have developed according to management expectations, but the market visibility for 2010 continues to be weak. The importance of strong balance sheet increases in an uncertain economic climate.
"The overall cautious market sentiment in our customer industries has continued - with the positive exception of the paper and board industry in Asia, where we have seen improvement in the past few months. The recovery in China is partly due to the implemented stimulus measures. So far it has resulted in several sizable orders for us, one of which has been included in our second quarter orders received and the rest are to be included later this year," says Jorma Eloranta, President and CEO of Metso Corporation.
"The order intake for our equipment and project business in the first half of the year was low, while the services demand remained reasonably stable and satisfactory. Our profitability also remained satisfactory. Our overall financial development for January-June as well as our updated estimates for the second half of the year support our earlier guidance for this year. Our financial position is also solid."
Eloranta notes that the overall market visibility for 2010 is weak. "We are prepared to take additional capacity adjustment measures when needed. Our Board has today decided not to pay any additional dividend for 2008. This is mainly due to the continuing general uncertainty on the markets. Our financial performance and financial position are stable and have developed according to our expectations. The importance of strong balance sheet increases in an uncertain economic climate."
Fibre producers continue to postpone investment decisions due to low capacity utilization rates and uncertainty related to demand development. Metso has launched many measures to adjust to the rapidly changing operating environment. "We are adjusting our capacity as well as cost and operational structure to correspond with the demand, in order to maintain our competitiveness. As a result of the global recession, the markets for our products are decreasing, leading to tightening cost competition."
The company estimates that the demand for power plants utilizing renewable energy sources will be satisfactory in Europe and North America in 2009. Many countries have initiated plans to increase the use of renewable energy sources. This is expected to support the demand for power plants utilising biomass and waste. However, limited availability of financing may delay decision making in these projects. (Source: press release)
Appleton to explore sale of C&H Packaging
(Appleton, U.S., July 28, 2009) Appleton said that it intends to explore options to sell C&H Packaging Company, a wholly-owned subsidiary Appleton acquired in April 2003.
C&H Packaging is located in Merrill, Wisconsin, and prints and converts flexible plastic packaging materials for companies in the food processing, household and industrial products industries.
C&H employs approximately 100 people.
Appleton's chief executive officer, Mark Richards, said that Appleton intends to focus its performance packaging operations on film production. Appleton's film-producing facilities include American Plastics in Rhinelander, Wisconsin and New England Extrusion in Turners Falls, Massachusetts and Milton, Wisconsin.
Appleton said it is evaluating the impact that a potential sale of C&H Packaging will have on Appleton's financial statements; such impact could be material.
Appleton said that it can offer no assurances that a transaction will occur or, if one is undertaken, its terms or timing.
The company said it won't provide additional public comment about the progress or developments of this process unless its board of directors enters into a definitive sales agreement with a potential buyer. (Source: Appleton Inc.)
Environment: Burning by Asia Pulp & Paper contributes to haze in Indonesia, Malaysia
(Indonesia, July 28, 2009) One quarter of fire hotspots recorded in the Indonesia province of Riau on the island of Sumatra in 2009 have occurred in concessions affiliated with Sinar Mas Group's Asia Pulp & Paper (APP), according to new analysis by Eyes on the Forest, a coalition of environmental groups. The fires are contributing to the "haze" that is affecting air quality and causing health problems in Malaysia.
The analysis of NASA satellite imagery by Eyes on the Forest reveals that APP continues to clear forest in the Giam Siak Kecil-Bukit Batu, a block of which was recently declared a UNESCO Biosphere Reserve.
"Asia Pulp & Paper/Sinar Mas Group and their associated companies should take seriously their legal responsibility as license holders to prevent such fires in their concessions, regardless of whether the fires are caused by themselves or others," said Susanto Kurniawan of Jikalahari. "We also call on APP/SMG to stop building new roads through or next to natural forest, digging peat drainage canals and clearing any more natural peatland forest. All of that facilitates fires."
"Whether through fires, draining or forest clearance in its wood-sourcing concessions, APP/SMG is the single biggest contributor to the destruction of natural forest and peat soil in the original ecosystem where the Biosphere Reserve was established. Between 1996 and 2007, APP had pulped 177,000 hectares - 65 percent of all natural forest lost in the ecosystem," added Nursamsu of WWF-Indonesia.
For the first 6 months of 2009 that Riau Province had the largest number of fire "hotspots" in Indonesia with 4,782.
"These forests were cleared sometimes without proper licenses and sometimes even inside provincial protection areas," said Hariansyah Usman of Walhi Riau. "In addition, they also sometimes violated Presidential Decree Number 32 Year 1990, which prohibits clearance of natural forest on peat soil deeper than 3 meters. APP/SMG still continues this kind of legally questionable forest clearance elsewhere in Sumatra. We call on the government to reopen the findings of the recently terminated illegal logging investigation properly, instead of closing the case. We also call on the government to take legal action against companies which set fires."
Eyes on the Forest notes that only 35 percent of the 700,000-hectare UNESCO Biosphere Reserve is natural forest?the rest is dominated by biologically-impoverished acacia plantations.
"We hope that the biosphere reserve's natural forest will remain and that the health of the peat ecosystem of the reserve will recover. For that to happen, APP needs to provide real security to the area and conduct responsible hydrological management of the peat. The recent fire hotspot map clearly shows that the company does not. It is time for them to live up to their own PR," said Jikalahari's Susanto Kurniawan.
APP has been targeted by green groups for its role in the destruction of forests and peatlands in Bukit Tigapuluh in Central Sumatra. APP's activities threaten an important population of critically endangered Sumatran orangutans as well as other at-risk species, including Sumatran tigers. APP plans to clear up to 200,000 hectares of Bukit Tigapuluh. (Source: mongabay.com)
Ratings: Domtar jumps on upgrade
(Canada, July 28, 2009) The market appears to have responded very favorably to an upgrade of Montreal-based pulp and paper maker Domtar Corp. The stock jumped after Deutsche Bank analyst Mark Wilde moved his rating from Hold to Buy, while maintaining a US$24 price target on expectations that the company's financial performance is nearing an inflection point and that both EBITDA and net earnings should see meaningful improvement over the next three to four quarters.
The analyst also trimmed his 2009 EPS loss forecast from -US$3.60 per share to -US$2.68 and shifted his 2010 loss from -US$1.20 to earnings of US50Ē.
Domtar's prices fell just US$5-10 per ton in July, following declines of about US$5 in June.
"This represents a moderating in downward price pressure," Mr. Wilde told clients.
Domtar's number two commodity, market pulp, is already rebounding robustly, he added.
The analyst also noted relief coming on the cost side with pulpwood, chemicals, energy and transportation costs all at modest levels. Meanwhile, Domtar has pointed to US$150-million in asset sales over the next 12 months.
In the context of its total enterprise value of US$2.8-billion (US$2.1-billion in net debt) and roughly 43 million shares, "the sensitivity to reduced debt and improving EBITDA is impressive," Mr. Wilde said.
"While we continue to regard Domtar as a higher risk paper stock, cyclical winds appear to be shifting in Domtar's direction." (Source: Media report, U.S.)
Pulp and paper industry group seeks accreditation
(U.S., July 2009) ANSI organizational member TAPPI - Technical Association of Pulp and Paper Industry has submitted an application for accreditation as a developer of American National Standards.
A leading association for the worldwide pulp, paper, packaging, and converting industries, TAPPI seeks accreditation for its operating procedures for documenting consensus on proposed American National Standards For additional information or to submit comment, contact: Charles Bohanan, Director of Standards & Awards, TAPPI, (770-209-7276; 770-446-6947; standards@tappi.org).
Comments to TAPPI should be offered by August 31, 2009, with a copy to Jim Thompson, the recording secretary of ANSI's Executive Standards Council (fax: 212-840-2298; Jthompso@ansi.org). (Source: press release)
Temple-Inland posts increase in 2Q profit
(U.S., July 23, 2009) Temple-Inland Inc. today reported second quarter 2009 net income of $66 million, or $0.61 per diluted share, compared with first quarter 2009 net income of $35 million, or $0.33 per diluted share, and second quarter 2008 net income of $8 million, or $0.07 per diluted share. Second quarter 2009 net income excluding special items was $26 million, or $0.24 per diluted share.
Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, "We had another very good quarter. We delivered solid operating results, return on investment, and cash flow, despite continued tough economic conditions. In the quarter, we generated $172 million of cash from operations and reduced our debt by $116 million.
"In Corrugated Packaging, we had a record second quarter as both our mills and box plants ran well in the quarter and we continued to drive down cost. Our results reflect the continued benefit from our box plant transformation, the acquisition of PBL, our heavy orientation to the food and beverage market and our integrated system. We reduced our inventories further in the quarter and our quarter-ending inventories were at their lowest level since 2002.
"In Building Products, we did not experience the traditional seasonal pick-up in demand in the quarter. Even so, due to our low cost structure, declining input costs and our favorable mix of products, we generated $8 million of EBITDA in the quarter. We remain focused on matching our supply with our demand, lowering costs, generating cash and returning to profitability in this business.
"As we look forward, economic conditions, while still uncertain, appear to be stabilizing. The actions we have taken to improve asset utilization, drive down costs, match our production to our demand and profitably grow our business, position us to continue to deliver solid relative results."
Corrugated Packaging
Corrugated Packaging operating income was $91 million, a record second quarter. Earnings improved in second quarter 2009 compared with second quarter 2008 as lower mill and converting costs and the benefits of the PBL acquisition more than offset lower box volumes and prices. Operating results declined compared with the all-time record first quarter 2009 earnings due primarily to lower box prices, partially offset by lower costs and higher box volumes. (Source: Temple-Inland)
Wausau Paper Q2 loss narrows
(U.S., July 27, 2009) Monday, Wausau Paper Corp. (WPP: News ), a manufacturer and seller of paper and paper products, reported a net loss for the second quarter that narrowed year-over-year helped by the restructuring and cost reduction initiatives, and reduced fiber energy prices. The company also provided guidance for the third quarter of fiscal 2009, that came above the Street view.
Net loss for the quarter narrowed to $1.9 million or $0.04 per share from $9.6 million or $0.20 per share in the corresponding period last year.
Excluding items, adjusted earnings were $7.5 million or $0.15 per share compared with a net loss of $1.6 million or $0.03 per share last year. Two Street analysts polled by Thomson Reuters expected the company to earn $0.07 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the most recent quarter include after-tax facility closure charges of $13.4 million or $0.27 per share related primarily to the May closure of Specialty Products' Jay, Maine, paper mill and the previously announced closure of Printing & Writing's Appleton, Wisconsin, converting facility.
In addition, results for the second quarter also included after-tax gains of $3.6 million or $0.07 per share related to a tax credit for the use of alternative fuel mixtures and after-tax gains of $0.4 million or $0.01 per share associated with the sale of timberlands.
Prior-year second-quarter results included after-tax charges of $8.8 million or $0.18 per share related to the closure of a Printing & Writing mill in Groveton, New Hampshire, and Specialty Products' roll wrap operations and timberland sales gains of $0.8 million or $0.02 per share.
Quarterly sales and shipments both slid 14% to $262.2 million and 177 thousands tons, respectively, due to anticipated volume reductions resulting from facility closures and continuing demand weakness in several market categories. Two Street analysts expected the company to report sales of $272.26 million for the quarter.
Thomas Howatt, president and chief executive officer, said, "The restructuring and capital investment initiatives have improved product mix, reduced manufacturing costs and increased the fundamental earnings power of our businesses while cost reduction and cash conservation measures have significantly increased liquidity"
For the six month period, net loss narrowed to $3.3 million or $0.07 per share from $16.4 million or $0.33 per share in the same period last year. Adjusted net earnings were $10.9 million or $0.22 per share compared with a prior-year net loss of $4.7 million or $0.10 per share. Net sales declined to $500.95 million from $603.93 million in the year-ago period.
Looking ahead, the company expects third-quarter adjusted net earnings to approximate second-quarter adjusted net earnings of $0.15 per share. Analysts currently expect the company to earn $0.10 per share for the quarter. (Source: WPP)
Rock-Tenn Q3 profit surges
(U.S., July 27, 2009) Packaging product maker Rock-Tenn Co. (RKT: News ) Monday reported a surge in third quarter profit that breezed past analysts estimate, boosted by higher operating income, offsetting declines in quarterly sales. Sales were hurt by weak segmental revenues, but came in above estimates.
For the third quarter, net income of Norcross, Georgia-based company surged to $87.0 million or $2.24 per share from $18.8 million or $0.49 per share in the same quarter a year ago.
On an adjusted basis, net income was $55.7 million or $1.44 per share, up from $26.9 million or $0.70 per share in the prior-year quarter.
On average, four analysts polled by Thomson Reuters expected earnings of $0.89 per share for the quarter. Analysts' estimate typically excludes one-time items.
James Rubright Chief Executive Officer stated, "Our adjusted earnings of $1.44 for the quarter and $3.42 for the nine months ended June 2009, reflect the very low cost positions we have achieved in our businesses and the economic resiliency of our food and consumer packaging based businesses."
Net sales for the quarter dropped to $703.9 million from $771.0 million in the prior-year quarter, surpassing Street estimates of $693.89 million.
Consumer Packaging segment net sales declined 3.0% to $377.2 million, due to lower volumes partially offset by higher folding carton unit pricing. Corrugated Packaging segment net sales dropped 10% to $186.5 million, due to lower volumes. Specialty Paperboard Products segment net sales plunged 24.4% to $77.2 million primarily due to decreased volumes and lower recycled fiber prices. Net sales from Merchandising Displays Segment were $79.7 million, down compared to the same quarter a year ago.
In the immediately preceding second quarter, Rock-Tenn posted an increase in earnings of $37.4 million or $0.97 per share, boosted by higher segment income. Net sales, however, were down at $676.3 million.
For the quarter under review, operating profit surged to $140.6 million from $55.6 million from the year-earlier quarter.
For the nine-month period, net income nearly tripled to $155.0 million or $4.02 per share from $53.4 million or $1.40 per share in the same period last year. Adjusted net income was $132.1 million or $3.42 per share, compared to $71.3 million or $1.87 per share in the year-earlier period. Net sales for the period improved to $2.08 billion from $2.05 billion in the prior-year period.
RKT closed Monday's regular trading at $45.02, up $0.46 or 1.03%, on a volume of 0.43 million shares. In after-hours, the stock dropped $1.02 or 2.27%, to trade at $44.00. (Source: press release)
In Q2 Aracruz pulp sales grew by 8% year-on-year
(Sao Paulo, Brazil, July 24, 2009) The most recent data on global economic activity still shows fallout from the financial crisis, but indicates a slowing down of the GDP decline in a number of regions. In this context, the market pulp segment saw a 6.6% reduction in demand during the period January to May 2009, when compared to the same period of 2008, Aracruz reports.
Nevertheless, producers' inventories continued to fall, reaching 34 days of supply at the end of May, similar to the same period of 2008, mainly due to a 66% increase in purchases by China and the discipline of the producers in controlling supplies. As a result, pulp prices have reversed their downward trend, showing a recovery in all regions during the second quarter of 2009.
The consolidated pulp production of Aracruz reached 780,000 tons, 8% higher than the 1Q09 figure, due to the downtime at the Barra do Riacho unit during the first quarter, and was in line with that of the 2Q08. Pulp sales came to a total of 832,000 tons, a record for a second quarter and respectively 2% and 8% more than in the 1Q09 and the 2Q08, mainly due to the large volume shipped to China, which maintained the sales to the Asian market around 45% (2Q09: 44%; 1Q09: 45%; 2Q08: 23%). As a result, the inventory level at the end of May was at 42 days of production, 7 days lower than the level at end of March 2009.
The pulp cash production cost was R$ 423/ton, 9% under the 1Q09 cost, of R$ 464/ton, mainly due to the lower cost of raw materials and the greater dilution of fixed costs. The figure was down by 10% in comparison with that of the 2Q08, due to the cost reduction program announced by the company during the 3Q08, and to the lower cost of raw materials, particularly chemicals and wood.
The adjusted EBITDA came to R$ 206 million, which was respectively 17% and 42% down in relation to the figures for the 1Q09 and 2Q08, and the EBITDA margin was 26% (1Q09: 29% and 2Q08: 40%). In the comparison with the 1Q09, the reduction was largely due to the R$ 104/ton lower average pulp price, despite the lower pulp cash production cost in the cost of goods sold (-R$19/ton), as well as lower logistics expenses. Compared to the 2Q08, the impact of the R$ 211/ton lower average pulp prices was the main reason behind the reduced margin.
The net financial result, including monetary and exchange variations, was a net income of R$ 895 million, against a net expense of R$50 million in the 1Q09, mainly due to the 16% appreciation of the local currency (real - R$) against the US dollar during the 2Q09, since 69% of Aracruz's debt is denominated in foreign currency. As a result of the abovementioned factors, the net income for the quarter came to R$ 595 million, equivalent to R$ 0.58/share, positively affected by the currency impact on the financial results, and the operating income for the period.
The company had a cash position of R$ 614 million, as at June 30, 2009, 70% of it in local currency. The total debt, including 50% of Veracel, amounted to R$ 8,158 million, with an average repayment period of 52 months.
As part of the effort to fine-tune the company's internal controls and governance, the Board of Directors approved a new financial policy that consolidates the Market Risk Management and Cash Management policies.
On July 1st, a change of control mandatory tender offer auction was carried out by Votorantim Celulose e Papel S.A. (VCP), aimed at acquiring all the common stock issued by Aracruz that is still in circulation in the Bovespa (Sao Paulo Stock Exchange) market, at a price equivalent to 80% of the amount paid to the company's former controlling shareholders, or R$ 17.0031 per common share (ARCZ3). Through this tender offer, VCP was able to acquire 89% of the common share free float.
With regard to VCP's future absorption of the shares issued by Aracruz, the board members of the two companies agreed, at a joint meeting, to adopt an exchange ratio within the range accepted by their respetive Independent Special Committees (in accordance with CVM Guidance no 35/08), as close as possible to the maximum suggested by the Aracruz Committee (0.1342 to 0.1473) while respecting the limit imposed by the VCP Committee (0.0924 to 0.1347). Hence, the board members decided, on June 1st, to adopt the exchange ratio originally proposed, of 0.1347, for shares of the same type, on the understanding that this ratio meets the recommendations of both committees. In the event that the conversion of Aracruz's preferred stock into common shares has not taken place at the time of the stock swap merge, and given that all the Aracruz shareholders are to receive VCP common stock anyway, the exchange ratio approved by the committees should be adjusted, so as to also reflect the ratio of 0.91 of a common share for one preferred share, that has already been announced. (Source: press release)
Canfor Pulp posts second quarter 2009 results
(Canada, July 27, 2009) Canfor Pulp Income Fund on Friday announced its second quarter 2009 results as well as the results of Canfor Pulp Limited Partnership in which the Fund has a 49.8% ownership.
The Partnership reported sales of $205.0 million and net income of $1.5 million, or $0.02 per unit, for the quarter ended June 30, 2009. The Partnership generated EBITDA of $7.2 million in the quarter. The Fund reported net income of $4.4 million, representing the Fund's share of the Partnership's net income and a non-cash recovery of $3.7 million for future income tax.
The Partnership generated standardized distributable cash of $20.6 million, or $0.29 per unit. Adjusted distributable cash was $1.1 million, or $0.02 per unit, in the second quarter of 2009. For the second quarter, the Partnership and the Fund declared distributions of $0.03 per unit.
The second quarter of 2009 was highlighted by a continued focus on cost control, working capital management and cash conservation in light of continued adverse market conditions. NBSK pulp US dollar list prices decreased further in the quarter and when combined with the stronger Canadian dollar represented a 10% decrease of list price in Canadian dollar terms.
Offsetting the lower overall pricing for the Partnership's pulp and paper products was a 10% decrease in unit manufacturing costs attributable to lower fibre, energy and chemical prices combined with focus on controllable costs through cost reduction initiatives and the management of discretionary spending. Working capital was reduced by $22.2 million in the quarter as finished goods inventories were reduced on increased sales into China. The reduction in working capital, and capital expenditures limited to $2.2 million, allowed the Partnership to increase its net cash position to $3.2 million as compared to a deficit of $15.6 million at the end of the first quarter of 2009.
Pulp markets improved in the second quarter as significant supply curtailments have mitigated reductions in global demand, resulting in reduced producer inventory stocks and price increases. NBSK US dollar list prices were US$635 in April rising to US$660 in June with announced prices for July of US$700.
During the second quarter of 2009 the Intercontinental and Prince George Pulp and Paper Mills completed scheduled maintenance outages resulting in reduced market pulp production of approximately 7,000 tonnes and reduced paper production of 3,000 tonnes. There are no planned maintenance outages for the third quarter of 2009. For the remainder of the year there is a planned maintenance outage in the fourth quarter at our Northwood facility which is expected to reduce production levels by 21,000 tonnes.
The billion dollar Green Transformation Program announced by the Canadian government on June 17, 2009 proposes to provide a $0.16 per litre credit to qualifying Canadian facilities for black liquor consumption commencing January 1, 2009. The program is to take the form of funding for qualifying energy and environmental capital projects. The Partnership expects to qualify for funding under this program and has commenced development of a list of significant qualifying capital projects in anticipation of submission once the program details are finalized.
On July 22, 2009 the Fund announced a cash distribution of $0.01 per Fund unit for the month of July to be paid on August 14, 2009. (Source: Canfor Pulp Income Fund)
Hamburger Hungaria starts-up new Voith PM
(Heidenheim / Budapest, July 24, 2009) Hamburger Hungaria Ltd, member of the Prinzhorn Group, has started up a new containerboard machine in Dunaujvaros, 70 km South of Budapest.
The new PM 7 -- delivered by Voith -- has a wire width of 8,600 mm and design speed of 1,500 m/min. The machine has an annual production capacity of about 400,000 tons of corrugating medium and testliner in a basis weight range of 70-150 g/m2.
According to Voith, start-up was on schedule with paper production in mid-June 2009.
The packaging paper machine delivered by Voith produced the very first paper of 90 g/mē with a record speed of 1,225 m/min. The owner, Hamburger Hungaria Kft. Containerboard, is part of the Austrian Hamburger Group and operates Hungary's largest paper mill at the Dunaujvaros site.
PM 7 runs on a 100% recycled stock basis, Voith said.
The project also included an extensive automation package from Voith.
Hamburger Hungaria is part of the Austrian Hamburger Group and operates Hungary's largest paper mill at the Dunaujvaros site. (Source: Voith)
Handelsbanken raises targets on Stora Enso, SCA after Q2 figures
(Germany, July 27, 2009) Handelsbanken Capital Markets has raised its share price targets on Finnish paper maker Stora Enso Oyj and on Swedish hygiene and paper group Svenska Cellulosa AB after their reports for April-June 2009 from last Thursday.
The broker also reiterated its "buy" rating on both groups in its report analyses, published last Friday.
Handelsbanken raised the price target on SCA to SEK110 and on Stora Enso to EUR5.5 from EUR5.0.
The target increase for SCA was a result of Handelsbanken's raised estimates after the group's interim report.
The report was strong due to stable-to-good volumes within the hygiene business, higher prices in certain segments, lower prices of input goods, as well as positive currency effects, according to the broker. These factors are expected to continue to support SCA's profitability in the rest of 2009.
Handelsbanken also estimates that the consensus estimates for the group will increase and this, combined with reduced uncertainty and improved result pattern, leads to additional upside potential for the stock.
Stora Enso's second-quarter result and cash flow were substantially above Handelsbanken's expectations.
The broker sees better margins in the rest of 2009 and has therefore upgraded its estimates for the group's adjusted EBIT by 3% for 2009 and by 8% for 2010. (Source: press release)
Kimberly-Clark: profit drops 3.4%
(U.S., July 23, 2009) Diaper and tissue-maker Kimberly-Clark Corp. said Thursday that the company's profit in the second quarter fell 3.4 percent as the company grappled with the effects of a negative currency exchange rate, higher pension expenses and other charges.
Irving-based Kimberly-Clark (NYSE: KMB) posted a profit of $403 million, or 97 cents per share, for the quarter on sales of $4.7 billion. That is down from a profit of $417 million, or 99 cents per share, on sales of $5 billion during the same quarter last year.
The company's Chairman and Chief Executive Officer Thomas Falk said business conditions remained challenging in the second quarter, but the company managed to improve its gross margin and experienced double-digit organic top-line growth in emerging markets.
Kimberly-Clark said it is more optimistic about 2009 and even raised its earnings guidance with the expectation that the company will report earnings per share in the $4.10 to $4.25 range, which is up from a previous estimate of $4 to $4.20.
Earlier in the year, Kimberly-Clark announced it would be cutting its global work force by 1,600 positions. About 600 of 750 impacted North American positions will be eliminated through a voluntary severance program. Kimberly-Clark said that a first round of staffing cuts will begin this week.
The cuts will save the company $150 million annually, Kimberly-Clark said. (Source: press release)
Albany International closing Tennessee plant
(Menands, U.S., July 28, 2009) Albany International Corp. is closing its Portland, Tenn., factory within the next year.
The factory, which makes forming fabric used in paper mills, employs 156 people.
Albany International, which makes belts and fabrics used in paper manufacturing, has been consolidating its facilities in Europe and North America as the paper industry has been shutting down mills in those areas.
South Carolina and Wisconsin remain the only places in the United States where the company still has paper machine clothing manufacturing. (Source: press release)
India: JK Paper profit doubles, lines up Rs 1,400-cr capex
(New Delhi, India, 28 Jul 2009) JK Paper is planning to expand production capacity over 60% to 3.9 lakh tonnes per annum with an investment of Rs 1,200-1,400 crore by 2012, a top company executive said on Monday.
One of the top three paper producers in the country, JK Paper doubled its net profit for the quarter ended June 2009 to Rs 20.2 crore, although net sales for the quarter declined 1% to Rs 260.6 crore, compared with the same period last year.
JK Paper managing director Harsh Pati Singhania said: "Better sales realisation, lower raw material and input cost, high operating efficiencies and reduced forex charges helped the company post significantly better results." Elaborating on the expansion plans, he said: "We are yet to finalize how to fund the investment, but it would be a mix of debt, equity and internal accruals."
The total paper production for the quarter stood at 66,921 tonnes, up 6% over same period last year. The company reported overall capacity utilization of 112% for the quarter, a reason why it is planning to hike the capacity further.
Although the firm would invest in all paper categories where it is operating, a large part of the investment would go into the writing and printing paper segment. (Source: Media report, India)
Neenah Paper launches ?Do You Love Linen' site
(Neenah, WI, U.S., 24 July 2009) Neenah Paper wants designers to save their imagination for when they really need it.
Thanks to the company's latest effort marrying paper and technology, designers no longer have to imagine what their finished work might look like on the company's CLASSIC Linen papers line. Now they can see for themselves just how well CLASSIC Linen Writing, Text and Cover grade papers will help visuals pop at Neenah's new ?Do You Love Linen?' website
The new site -- created to celebrate CLASSIC Linen's updated offerings and keep the sparks flying from the recent brand revision -- makes it easier than ever for designers to "try before they buy" through the virtual online studio.
"We encourage designers to be inspired and experiment with the colors, textures and tones showcased on the website," says Kristin Carpenter, assistant advertising and design manager at Neenah Paper.
"They can upload a design of their own or grab one from Neenah's image library and see what a world of difference the right paper makes. And, if they like what they see, with just a few keystrokes, their own Neenah Personal Proof will be on its way to their office."
With the Neenah Personal Proof, the only program of its kind offered by a paper company, designers can order up to three free printed samples of a single design on different Classic Linen papers; and multiple visits are encouraged. Once they submit their Personal Proof order, the samples will be custom printed and sent to them within two weeks.
"Both the website and the Neenah Personal Proof are revolutionary for our industry," says Carpenter.
"We believe the ability to digitally view the color and texture of paper online and then receive a printed sample of your personal work is really going to amaze designers."
Innovation is nothing new for Neenah, which has made its name by creating cutting-edge applications in user-friendly ways. Most recently, the company made news by introducing the first iPhone and iPod Touch application that allows designers to create color palettes from the palm of their hand using the Dewy Color System.
"Our goal at Neenah is to continue to inspire our customers," sums up Carpenter. "By creating tools to make their jobs easier and providing them with premium uncoated papers that turn ordinary applications into extraordinary projects, we want to continue to surprise and inspire them." (Source: press release)
Mercer International Inc. announces changes to the Green Energy Project for its Celgar Mill and renewal of Rosenthal credit facility
(U.S., July 24, 2009) Mercer International Inc. announced it is reviewing implementing changes and reworking the Green Energy Project (the "GEP") for its Celgar Mill in light of the recently announced Canadian federal government's Cdn.$1 billion green transformation program and the volatility in the capital and credit markets which has resulted in project financing being currently unavailable on acceptable terms, as reported by Mercer. The Program is to provide funding in the form of grants to Canadian pulp and paper mills for capital expenditures that improve energy efficiency and environmental performance.
The amount of funding is to be based upon the amount of black liquor produced by a mill in 2009. Although there can be no assurances yet as to the amount and terms of such funding because the specific rules have not yet been released, based upon the public announcement of the Program and its black liquor production, Mercer currently believes that the Celgar mill should qualify for Program funding significantly in excess of the cost of the GEP.
Mercer is reviewing various changes and reworking the GEP to enhance energy production, efficiency and the environmental performance of the Celgar mill based upon realizing on the opportunities under the new Program and other matters.
Mercer also announces it received commitments to renew the revolving credit facility for its Rosenthal mill which matures in February 2010 with a revolving facility of 25.0 million maturing in December 2012 and a four-year amortizing term facility of 4.4 million.
Jimmy Lee, the Chief Executive Officer of Mercer, commented that: "In light of the new government program, we felt it was prudent to review and rework the GEP to determine the best way to optimize the same. The changes will be designed to produce the best project for the mill, further increase green energy production and environmental performance and take advantage of such funding as may be available under the new federal program. Additionally, due to the volatility in capital and credit markets, the availability of stand-alone project financing currently for the prior scope of the project was prohibitive."
He concluded: "While reworking a significant capital program like the GEP will result in a delay in the short term, we believe that, in the long run, it will be in the best interests of all of our stakeholders." (Source: press release)
Sree Sakthi Paper Mills net profit in Q1 down to Rs 1.02 crore
(India, July 28, 2009) Sree Sakthi Paper Mills Ltd has announced the financial results for the quarter ended on 30-June-2009. The Net Sales was at Rs.3280.38 lacs for quarter ended on 30-June-2009 against Rs.3432.67 lacs for the quarter ended on 30-June-2008.
The Net Profit / (Loss) was at Rs.102.74 lacs for the quarter ended on 30-June-2009 against Rs.118.56 lacs for the quarter ended on 30-June-2008.
The company has reported an EPS of Rs.0.63 for the quarter ended on 30-June-2009 against Rs.0.72 for the quarter ended on 30-June-2008.
The stock closed the day at Rs.16.40, down by Rs.0.05 or 0.30%. The stock hit an intraday high of Rs.16.90 and low of Rs.16.25.
The total traded quantity was 12639 compared to 2 week average of 16664. (Source: Equity Bulls)
Billerud opens door to India and Brazil
(Stockholm, Sweden, 23 July 2009) The packaging group has signed a deal with Rigesa to produce Billerud Flute for the Indian and Brazilian fruit and vegetable industries
Sweden-based corrugated cardboard packaging specialist Billerud has announced that it has signed an agreement that will open up access to both the Brazilian and Indian fresh produce markets.
The deal sees the group partnering with corrugated box expert Rigesa, which supplies both the domestic and Indian fruit and vegetable markets, with the Brazilian company adopting Billerud Flute for the production of its packaging.
According to Billerud, the partnership will create opportunities to grow in the two fast-expanding markets, with the Swedish group also offering optimized material selection and quality measurements during transport through its Fresh Services concept.
"Together with Billerud we can offer our customers opportunities to create even more efficient packaging that reduces waste and maintains structural integrity," said Rigesa product and business director Armando Pimentel. "Billerud Flute is a high quality product of special interest to us. We see great possibilities in working together with a reliable and innovative supplier such as Billerud."
The partnership forms part of Billerud's ongoing strategy to advance higher up the value chain and create a global standard for fruit and vegetable packaging, the group said.
"Through our new service, Fresh Services, we have achieved success in the past two years," said Lennart Eberleh, head of Billerud's packaging boards business area. "We now take this experience into Brazil and India, which are among the world's largest exporters of fruit and vegetables." (Source: fruitnet.com)
Fitch rates Chile's Celulosa Arauco y Constitucion's $500MM Notes BBB+
(New York, July 28, 2009) Fitch Ratings has assigned a BBB+ rating to Celulosa Arauco y Constitucion S.A.'s (Arauco) USD 500 million, 7.25% notes due July 29, 2019. Proceeds from this debt issuance will be used to repay upcoming debt amortizations and for general corporate purposes.
The rating takes into consideration Arauco's solid business position globally and its strong financial profile. Between 2003 and 2008, Arauco averaged a funds from operations (FFO)/adjusted leverage ratio of 2.2 times (x) and a net debt/EBITDA ratio of 1.9x. During this time period, the company spent almost USD 4 billion on capital expenditures and acquisitions. As a result of these investments, the company is the second largest producers of market pulp in the world and one of the leading producers of lumber and panels.
Arauco is one of the lowest cost producers of bleached pulp in the world, with its cash cost or production estimated to be USD 340 per ton during 2008. This figure compares with more than USD 500 per ton for most of its global competitors, allowing Arauco to remain quite profitable throughout the trough in the pulp cycle. Further factored into Fitch's credit ratings is Arauco's ownership of nearly 950,000 hectares of forest throughout Latin America that have an accounting value of more than USD3 billion.
Arauco generated USD 1.138 billion of EBITDA and USD 783 million of cash flow from operations (CFO) during 2008. These figures compare with USD 1.360 billion of EBITDA and USD 1.029 billion of CFO during 2007. During 2008 Arauco invested USD 515 million in capital expenditures, a decline from USD 591 million in 2007, and paid USD 301 million of dividends, an increase from USD 284 million during 2007.
During 2009, Arauco's EBITDA is expected to decline sharply. The company generated only USD 126 million of EBITDA during the first quarter of 2009, a decline from USD 348 million during the same quarter of 2008.
The fall in profitability is due to a sharp drop in pulp prices and weak demand for sawn timber products and panels. As of March 31, 2009, Arauco had USD376 million of cash and marketable securities and USD 2.869 billion of debt. During May, the company announced that it had agreed to jointly purchase 130,000 hectares of forestry assets in Uruguay from ENCE. Arauco's portion of this acquisition, made jointly with Stora Enso, will total USD 172.5 million.
To respond to the current economic crisis Arauco has scaled back its capital investment plan to between USD 300 million and USD 400 million for 2009. It has also closed a couple of its sawmills. Arauco's controlling shareholder, Empresas Copec, has a strong financial profile and low liquidity needs so dividends could be scaled back from 40% of net income if needed. In spite of these efforts, the company will have a weak financial performance during 2009. For the year, Fitch believes that under current market conditions Arauco would generate about $700 million of EBITDA and less than $600 million of CFO. These historically low figures would result in a net leverage ratio of more about 3.0x and a CFO/total debt ratio above 3.5x.
Arauco's current Fitch foreign and local currency Issuer Default Ratings (IDRs) are both ?BBB+'. The company is one of the largest market pulp companies in the world with more than 3 million tons of production capacity per year. It is also the largest producer of sawn timber in the Southern Hemisphere, operating nine sawmills in Chile and two in Argentina. In addition to these sawmills, the company also owns five remanufacturing plants where lumber is processed into value-added products, such as ceiling and chair rail moldings, edge-glued panels and laminated products. Through organic growth and acquisitions, Arauco has built a large presence in panels in the past decade. The company currently owns three MDF plants, two particleboard plants, two plywood plants and a hardboard plant.
Empresas Copec, S.A. (Copec) owns 99.98% of Arauco. Copec, a leadig conglomerate in Chile, is also involved in fuel distribution, power generation, fishing and gas distribution. AntarChile S.A. (AntarChile) directly and indirectly owns 60.82% of Copec. AntarChile, in turn, is 74.29% owned by the Angelini Group, headed by Roberto Angelini. Fitch currently rates Copec's international scale rating BBB+ and AntarChile's national scale rating AA-(chl). (Source: press release)
Stora Enso: clear sequential improvement in operating profit
(Helsinki, Finland, July 23, 2009)
Highlights:
-- EUR 49 million operating profit excluding NRI and fair valuations through EUR 276 million (13 margin point) year-on-year reduction mostly in fixed and fibre costs
-- EUR 189 million cash flow from operations through third consecutive quarter of working capital and net debt reductions
-- EUR 418 million non-cash write-down due to refinancing of NewPage jointly with Cerberus; 19.9% shareholding in NewPage maintained
-- Continuing losses in Finland with structural external cost issues, further capacity cuts necessary
Message from CEO Jouko Karvinen: "Three months ago we expected the second quarter of 2009 to be a repetition of the extraordinarily difficult first quarter. We were unfortunately right about the demand remaining weak. Our continued push for pricing quality, including heavy curtailments, paid off with a slightly positive year-on-year development in paper and board pricing, however combined with materially lower pricing of wood products and market pulp.
"What is important as well is that our cost improvement actions in the past two years are now paying off. The overall costs went down by about EUR 280 million (13 margin points) year on year in the second quarter, mostly through a EUR 109 million year-on-year improvement in quarterly fixed costs and EUR 83 million lower fibre costs. A material part of the latter is due to our actions in curtailing the high cost Finnish asset base and directing the limited volumes to our lowest cost assets.
"With all these actions, and in spite of a 17% year-on-year volume reduction, our second quarter operating profit excluding NRI and fair valuations at EUR 49 million was clearly better than the EUR 3 million in the first quarter, although still unacceptably poor. Also, the cash flow from operations at EUR 189 million and cash flow after investments at EUR 81 million remained solid for a third quarter in a row. This led to another quarter of net debt reduction in an unprecedentedly difficult demand environment.
"The refinancing plan for NewPage, undertaken jointly with Cerberus, turned the second quarter operating profit including NRI into an operating loss, with no cash impact. At the same time, if anything this proves that our early decision two years ago to disengage ourselves from our North American operations was correct as we now can, and will, continue optimising our present asset base further and review strategic growth options.
"We foresee that demand will continue to be weak during the third quarter of 2009. Our lower cost level will help us to defend our earnings against price pressure in certain paper grades. Our Next Step programme announced in April to streamline the organization and cut overhead costs by a further EUR 250 million is progressing on time and cost targets. However, the completed and announced actions are still not enough to solve the external cost issues that have made some of our assets unprofitable, especially in Finland. For three consecutive quarters, the profit the Group has made outside Finland has been to a large extent or even completely lost in Finland. We are therefore preparing plans for not only continuing curtailments, but also permanent capacity closures in areas where we cannot see a rapid recovery to clearly positive returns. The specific plans, once finalized will be announced separately during the third quarter of 2009.
"We have not waited for better times, but instead acted, and that has proved to have been absolutely the right thing to do. We will never say we are ready, we have done everything -- on the contrary, now we want to move even faster."
Near-term Outlook
The market environment for the Group's products is expected to stay challenging as no immediate improvement in the economic outlook can be seen. Forecasts for advertising expenditure have been further revised downwards as a declining share of GDP is spent on advertising, and printed advertisements are stillosing market share in total advertising expenditure.
Though the pace of contraction is slowing, demand is forecast to remain weaker than a year ago for newsprint, magazine paper and fine paper in the third quarter of 2009. However, some seasonal improvement in the newsprint and magazine paper market in the third quarter is predicted compared with the previous quarter. Demand for liquid packaging board is forecast to remain the same as last year, but demand for other packaging products is expected to be weaker. The demand outlook for wood products remains weak due to depressed construction markets throughout Europe, Japan and USA.
In Europe some graphic paper grades are exposed to price pressure. Prices for consumer board and industrial packaging products are forecast to remain largely unchanged. Production curtailments have led to an improved balance between supply and demand in wood products. Some wood product prices are expected to increase.
In China the economy is recovering and demand for uncoated magazine paper is predicted to be stronger than a year ago. Prices for uncoated magazine paper are expected to stabilise. Market demand for coated fine paper is forecast to improve further and prices to maintain their slow improvement. In Latin America a seasonal improvement in coated magazine paper demand is anticipated in the autumn. Prices are expected to stabilise.
Stora Enso continues to forecast that its cost deflation excluding internal actions will be at about 4% for the full year 2009, the main contributor being the lower costs of fibre raw material (wood, recycled paper and purchased pulp). (Source: press release)
Nippon Paper and Cosmo Oil to develop bioethanol production technology
(Tokyo, Japan, Jul 24, 2009) Nippon Paper Chemicals Co., Ltd. and Cosmo Oil Co., Ltd. have conducted a feasibility study on biomass ethanol production since April last year, which revealed several technological challenges regarding the second-generation biomass ethanol production using woody materials, as reported by Nippon Paper.
Aiming to resolve these issues, the two companies teamed up with to respond to a call for parties interested in undertaking the 2009 Leading-Edge Biomass Energy Technology Research and Development, one of the areas covered by the new energy technology research and development projects by the New Energy and Industrial Technology Development Organization (NEDO). On July 7, it was announced that the team had been selected to undertake the research.
Nippon Paper Chemicals and Cosmo Oil will conduct research for two years together with the University of Tokyo and Kyushu University, studying the efficient production of ethanol from woody biomass using the sulfite delignification process.
The estimated project cost is about 20 million yen per year (funded by subsidies). (Source: press release)
Ahlstrom interim report January-June 2009; second quarter EBIT positive due to implemented actions
(Helsinki, Finland, July 24, 2009) I. April-June 2009 compared to April-June 2008:
- Net sales were EUR 398.9 million (465.9).
- EBIT amounted to EUR 9.7 million (19.4). The figure includes non-recurring items of EUR -3.0 million (-0.1).
- Profit before taxes was EUR 4.7 million (14.2) and earnings per share were EUR 0.05 (0.22)
- Net cash from operating activities increased to EUR 72.8 million (5.4).
January-June 2009 compared to January-June 2008:
- Net sales were EUR 775.0 million (932.2).
- Operating loss amounted to EUR 1.0 million (operating profit of 38.7).
- The figure includes non-recurring items of EUR -3.7 million (0.8).
- Loss before taxes was EUR 13.9 million (profit before taxes of 25.4) and earnings per share were EUR -0.21 (0.37).
- Net cash from operating activities increased to EUR 93.7 million (46.1).
II. Events in April-June 2009:
- A new restructuring program of EUR 50 million was announced on April 29, 2009. The full effect of the program will be visible in 2010.
- The company initiated a project to decrease cash tied up in working capital. The aim is to decrease the working capital by EUR 100 million in two years.
The maturity structure of the loan portfolio was extended by new medium-term bilateral loan facility agreements of EUR 55 million. Ahlstrom also finalized an agreement on the refinancing of a credit facility of EUR 200 million expiring at the end of 2009. The new financing agreement of EUR 200 million was signed after the review period on July 15, 2009.
III. Outlook for 2009:
The market environment will continue to be challenging and difficult to forecast. The demand for Ahlstrom products revived slightly in the second quarter, but it is anticipated to continue at a low level.
Jan Lang, President & CEO, comments on January-June 2009:
- In a continuously challenging market situation we managed to reach a profitable April-June EBIT by restructuring our operations. The streamlining measures and cost reductions in the first months are visible in the result. In addition, raw material prices decreased and market demand picked up slightly toward the end of the period. We have also successfully focused on improving our cash flow and decreased our net liabilities by almost EUR 30 million since the turn of the year. In addition, we have strengthened the company's funding base with the support of our relationship banks. Thanks to the new financing arrangements, the company's financing rests on a solid base.
IV. Operating Environment:
The very challenging market conditions that emerged during the last quarter of 2008 prevailed during the first two quarters of 2009, and the demand for most of Ahlstrom's products was weak. However, the weakening of the demand stopped and the demand for some products picked up toward the end of the review period.
In the Fiber Composites segment, the demand for Ahlstrom's products in the automotive, construction, marine and windmill industries continued to be exceptionally weak due to the global recession. The windmill application market was slow, especially due to the financing problems of new wind power plants. The Filtration business area was burdened by a significant slowdown in the servicing of passenger and freight transport vehicles along with the decrease in new vehicle production. The demand for wipes was weak as well. However, the demand for filters and wipes revived slightly during the second quarter. Market demand for food packaging and teabag materials as well as for nonwovens in medical applications was close to the level of early 2008.
In the Specialty Papers segment, the market demand in automotive, furniture, textile as well as in release and labeling industries, continued to suffer from the severe recession. Yet the demand picked up slightly during the second quarter of 2009.
The decrease in the market prices of Ahlstrom's main raw materials, natural and synthetic fibers and chemicals, started to level off and partly turned to an inrease at the end of the reporting period.
V. Outlook:
In 2009, the market environment is anticipated to continue to be challenging and difficult to forecast. Therefore, Ahlstrom changed its disclosure policy at the beginning of 2009. During a period of major uncertainty, the outlook only includes forecasts of the business and market environment. Forecasts of net sales development will be included when the predictability of the operating environment has returned to the previous level.
The market demand for Ahlstrom products revived slightly in the second quarter, but it is anticipated to continue at a low level. In addition to the restructuring programs announced in January and April, the company will adjust its operations to the market situation as necessary.
VI. Short-Term Risks:
The continued global recession will create several factors of uncertainty that might impact Ahlstrom's business. Production may need to be cut more than planned, and the risk of a steeper decrease in sales prices will increase if weak demand continues. Due to the weakening economy, customers' credit risks have increased and are more difficult to insure.
In addition, after decreasing during the first months of the year, raw material prices have begun to show the first signs of an increase. The prices of several raw materials used by Ahlstrom began to increase towards the end of the review period and have continued to increase thereafter.
If the challenging market conditions persist, they may prolong the payback period of the EUR 500 million investment program carried out by Ahlstrom in 2007 and 2008. (Source: press release)
Rottneros: Interim report January - June 2009; reports 1H 2009 loss
(Stockholm, Sweden, July 23, 2009) Highlights: [Amounts in SEK m except per share data]
-- The work of changing the operational structure gives positive effects on income. The income after net financial items for the second quarter of 2009 amounted to SEK 3 (-57) million.
-- The income after net financial items for the first half of 2009 amounted to SEK -112 (-179) million. The operating income for the first half amounted to SEK -102 (-158) million.
-- Cash-flow from current operations for the first half year amounted to SEK 34 (-2) million.
-- After the end of the reporting period Rottneros has agreed to pay off the entire existing bond loan of SEK 150 million. The effect for Rottneros of the transaction will be that SEK 110 million of the net debt will be written off and reduced and this will be recorded in the result for the third quarter.
-- The sale by the Rottneros Group of its operations at Rockhammar Mill to Korsnas AB was concluded and went into effect on 1 April 2009. The sale gave rise to a capital gain in the second quarter of just over SEK 50 million.
-- On 16 April Rottneros announced a decision to wind up the operations at the Spanish mill, Rottneros Miranda S.A. The operations and the company are being liquidated according to Spanish insolvency laws.
-- The balance on the pulp market has improved significantly, which is enabling prices to be increased.
-- The company will not be providing a forecast for the full year 2009. (Source: Rottneros)
Scotiabank's Commodity Price Index Posts Second Consecutive Gain in June
(Toronto, Canada, July 23, 2009) Scotiabank's Commodity Price Index, which measures price trends in 32 of Canada's major exports, climbed by 5.1% month-over-month (m/m) in June, bringing the overall gain from April -- the cyclical bottom -- to 7.5 per cent. Despite financial market jitters in early July, global economic indicators are turning positive for oil and base metal demand.
"China is the first major economy to emerge from the global downturn -- posting a 7.9 per cent year-over-year (yr/yr) GDP advance in the second quarter, up from a low of 6.1 per cent in the first quarter," says Patricia Mohr, Vice-President, Economics and Commodity Market Specialist at Scotiabank.
"The pick-up reflected stronger domestic demand, as powerful government fiscal and monetary stimulus kicked in, more than offsetting reduced exports and a narrowing trade surplus."
According to the report, while U.S. industrial activity was still exceptionally weak in June (-13.6 per cent yr/yr) - alongside auto-sector restructuring and downsizing - the scheduled ramp-up of motor vehicle assemblies in the third quarter, with Chrysler returning to production and General Motors revving up its output, will boost steel and metal-intensive industrial activity.
"Downsizing by GM and Chrysler will keep U.S. motor vehicle assemblies 22 per cent below a year ago in the third quarter," says Ms. Mohr. "Production will however improve substantially from the first half of 2009, when assemblies were cut in half. The net result, sentiment in U.S. financial markets for a moderate recovery in U.S. metal and steel demand will likely improve noticeably through the third quarter."
The increase in Scotiabank's Commodity Price Index was broad based in June with all major sub-components rising.
Forest Products
The Forest Products Index also rose by 1.6% m/m (its first gain since August 2008). While newsprint and fine paper prices continued to fall, U.S. building material and pulp prices edged up, a welcome development for this hard-pressed industry. U.S. housing starts bottomed at an exceptionally low 479,000 units annualized in April and inched up to 582,000 units in June, starting a slow recovery. (Source: press release)
Catalyst downplays roll-back plan
(Montreal, Canada, July 23, 2009) A spokesperson for Catalyst Paper says there is no special significance to a detailed memorandum of agreement proposing to re-start kraft production at its Crofton mill in exchange for a 10% wage reduction and cuts to pensions and benefits.
Dated June 26, 2009, the document involves Catalyst's Crofton Division and Local 2 of the Pulp and Paper Workers of Canada (PPWC). Under the proposal, Catalyst would enter into a 10-year agreement to operate one kraft machine, in exchange for concessions including a 10% reduction in wages, effective for five years, with a review by the company and the union for years six through 10.
Catalyst spokesperson Lyn Brown said the proposal is just that - a proposal - with no decision from either side.
"The only agreement that we're operating on is the one we signed last year," Brown said. "But the landscape is changing every day, and the discussions reflect that."
Brown said the Crofton proposal does not presage a similar move in Port Alberni. On Tuesday, Brown was in town to meet with Opposition forest critics Norm McDonald and Bill Routley.
She pointed out that her company signed an innovative agreement with the two Alberni locals of the Communications Energy and Paperworkers Union (CEP) to re-open the Number 4 directory paper machine.
"We talk every day about the conditions the industry is facing, and the reality that exists for each mill," Brown said. "This is just one of many discussions."
The plan would also eliminate a number of existing premiums paid according to specialized job descriptions or certifications.
As well, the company is calling for significant shifts in areas like pensions. While the overall employee contribution would remain at 18%, the employee would now contribute 11% (up from 8%), while the employer contribution would bump down to 7%.
All told, the memorandum outlines a steady ratcheting-down of existing benefits and entitlements. There is a provision for a bonus plan that "shares when the company is making money". (Source: Canwest News Service)
Anthem now contains 10 percent post-consumer recycled fiber
(Miamisburg, Ohio, U.S., July 23, 2009) NewPage Corporation announced today that its No. 3 sheetfed offering, Anthem, now contains 10 percent post-consumer recycled fiber as a standard for any orders placed on or after July 1, 2009.
"Anthem with 10 percent post-consumer recycled fiber is an economical, reliable and environmental solution for print users," said Steve DeVoe, general manager, sheets & caliper for NewPage. "And now, the entire Anthem gradeline is chain-of-custody (CoC) certified to Forest Stewardship Council (FSC), Sustainable Forestry Initiative ( SFI ) and the Programme for the Endorsement of Forest Certification (PEFC) standards and is in compliance with the Lacey Act Requirements," added DeVoe. Like all NewPage products, Anthem is manufactured, stocked and serviced in North America, which makes choosing Anthem an easy decision.
Printers using Anthem will enjoy its bright, blue-white styling readily available in text and cover weights, both gloss and matte finishes, for a wide variety of print applications. In addition to the environmental enhancements, the Anthem offering has been broadened to include 65 lb. (7 pt.) matte cover and 105 lb. (7 pt.) matte replay card, providing more options for environmentally conscious direct mailers.
For more information about the entire Anthem line, or any NewPage product, please contact your NewPage sales representative. (Source: NewPage Corporation)
Temple-Inland Inc. reports second quarter 2009 results
(Austin, Texas, U.S., July 23, 2009) Temple-Inland Inc. (NYSE:TIN) today reported second quarter 2009 net income of $66 million, or $0.61 per diluted share, compared with first quarter 2009 net income of $35 million, or $0.33 per diluted share, and second quarter 2008 net income of $8 million, or $0.07 per diluted share. Second quarter 2009 net income excluding special items was $26 million, or $0.24 per diluted share.
Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, "We had another very good quarter. We delivered solid operating results, return on investment, and cash flow, despite continued tough economic conditions. In the quarter, we generated $172 million of cash from operations and reduced our debt by $116 million.
"In Corrugated Packaging, we had a record second quarter as both our mills and box plants ran well in the quarter and we continued to drive down cost. Our results reflect the continued benefit from our box plant transformation, the acquisition of PBL, our heavy orientation to the food and beverage market and our integrated system. We reduced our inventories further in the quarter and our quarter-ending inventories were at their lowest level since 2002.
"In Building Products, we did not experience the traditional seasonal pick-up in demand in the quarter. Even so, due to our low cost structure, declining input costs and our favorable mix of products, we generated $8 million of EBITDA in the quarter. We remain focused on matching our supply with our demand, lowering costs, generating cash and returning to profitability in this business.
"As we look forward, economic conditions, while still uncertain, appear to be stabilizing. The actions we have taken to improve asset utilization, drive down costs, match our production to our demand and profitably grow our business, position us to continue to deliver solid relative results."
Corrugated Packaging:
Corrugated Packaging operating income was $91 million, a record second quarter. Earnings improved in second quarter 2009 compared with second quarter 2008 as lower mill and converting costs and the benefits of the PBL acquisition more than offset lower box volumes and prices. Operating results declined compared with the all-time record first quarter 2009 earnings due primarily to lower box prices, partially offset by lower costs and higher box volumes. (Source: press release)
SCA: Interim report Q2 2009
(Stockholm, Sweden, July 23, 2009) I. 1 January-30 June 2009 (compared with corresponding period a year ago)
- Net sales rose 3% to SEK 56,242m (54,852)
- Profit before tax, excluding restructuring costs, was SEK 3,525m (3,649)
- Restructuring costs in Packaging amounted to SEK 439m (0)
- Profit for the period, excluding restructuring costs, was SEK 2,608m (2,919)
- Earnings per share were SEK 3.24 (4.14)
- Cash flow from current operations amounted to SEK 4,687m (695)
CEO's Comments:
Net sales rose 3% compared with the same period a year ago, to SEK 56,242m. Operating profit for the first half of the year, excluding restructuring costs, was SEK 4,504m (4,670). Compared with the first quarter, operating profit excluding restructuring costs improved by 11%, to SEK 2,368m. Currency effects during the second quarter were marginal compared with the first quarter. Profit before tax, excluding restructuring costs, grew to SEK 2,014m, an improvement of 33% compared with the first quarter. Return on capital employed, excluding restructuring costs, was 8% for the first half of the year.
Our focus on strengthening the Group's cash flow -- among other things by reducing working capital -- continues to generate favourable results. Cash flow from current operations during the first half of the year amounted to SEK 4,687m, an improvement of SEK 3,992m compared with a year ago.
Sales of Personal Care products rose 17% during the second quarter compared with the same period a year ago. Following a relatively weak start of the year, sales grew 3% over the first quarter, while operating profit improved by 16%. Underlying this improvement is strong sales development in Europe, continued favourable performance in our emerging markets, and lower raw material costs. The operating margin strengthened compared with the first quarter and was 12.3% for the second quarter.
Net sales for the Tissue operations improved by 14% during the second quarter compared with the same period a year ago, and operating profit by 76%. The positive trend from the first quarter of the year has continued, and operating profit rose 17% during the second quarter. The increase can be credited to the strong performance of our AFH tissue business in the USA, continued strong performance in the European market, improved profitability in Mexico and Central America, and lower raw material and energy costs. This trend is particularly gratifying, as price pressure has risen and is expected to remain during the second half of the year.
The European Packaging operation weakened further during the second quarter, with continued weak demand and price pressure for corrugated board as well as for testliner. Operating profit was SEK 11m before restructuring costs. Producer inventories of liner have decreased significantly following cutbacks in production and plant closures by the market players. However, additional measures will be needed before supply and demand are in balance.
In our Forest Products business, net sales rose 2% during the second quarter compared with the same period a year ago, and operating profit improved by 16%. Despite a challenging market for publication papers, the favourable earnings trend from the first quarter continued, and operating profit rose 10% during the second quarter. The improvement is mainly attributable to lower energy and raw material costs. In the solid-wood products segment we are now seeing rising prices as a result of an improved market balance.
We will encounter continued difficult market conditions for the packaging operations during the second half of the year and therefore see a risk for an earnings decline for this business. Our Forest Products business is feeling the effects of price pressure for publication papers, while there is potential for price increases for solid-wood products. The economy is also affecting our hygiene business, mainly through a greater focus on price. However, we believe that the effects of thisif any, will be limited. [Jan Johansson, President and CEO] (Source: press release)
Metso signs a Letter of Order for LWC paper making line with MCC Meili of China
(Helsinki, Finland, July 24, 2009) Metso and the Chinese MCC Meili Paper Industry Co. Ltd. have signed a Letter of Order for the delivery of a lightweight-coated papermaking line to the customer's mill in Zhongwei city, Ningxia autonomous region in China, as reported by Metso. The start-up of the production line is scheduled for the first quarter of 2011. The total value of the order is approximately Eur 90 million. The deal is still subject to the parties coming to the final agreement of the project within a few months.
The Letter of Order covers a complete OptiConcept paper machine from headbox to reel with related stock preparation and air systems as well as finishing systems.
MCC Meili operates several paper machines in Zhongwei city on the Loess Plateau of northwest China. The company was originally founded in 1958 and it is today a subsidiary of MCC (China Metallurgical Group Corporation). MCC is one of the largest equipment manufacturers in China.
Metso is a global supplier of sustainable technology and services for mining, construction, power generation, automation, recycling and the pulp and paper industries. (Source: press release)
Domtar's Dryden pulp mill restarting
(Canada, July 23, 2009) Domtar's pulp mill in Dryden, Ontario has recalled its workers, ForestTalk reported.
About 230 workers have been off work since April 25th when the mill shut down temporarily due to the lack of pulp orders.
Workers are coming back in phases this week. All employees should be back by July 27th.
On Sunday, the mill will restart its steam plant. By next Wednesday the mill should be processing wood chips. Pulp production will follow shortly after.
About 200 employees involved in tree harvesting, hauling and bush road construction in the Dryden and Ear Falls areas returned to work on June 22. (Source: press release)
Temple-Inland posts increase in 2q profit
(U.S., July 23, 2009) Temple-Inland Inc. today reported second quarter 2009 net income of $66 million, or $0.61 per diluted share, compared with first quarter 2009 net income of $35 million, or $0.33 per diluted share, and second quarter 2008 net income of $8 million, or $0.07 per diluted share. Second quarter 2009 net income excluding special items was $26 million, or $0.24 per diluted share.
Doyle R. Simons, chairman and chief executive officer of Temple-Inland Inc., said, "We had another very good quarter. We delivered solid operating results, return on investment, and cash flow, despite continued tough economic conditions. In the quarter, we generated $172 million of cash from operations and reduced our debt by $116 million.
"In Corrugated Packaging, we had a record second quarter as both our mills and box plants ran well in the quarter and we continued to drive down cost. Our results reflect the continued benefit from our box plant transformation, the acquisition of PBL, our heavy orientation to the food and beverage market and our integrated system. We reduced our inventories further in the quarter and our quarter-ending inventories were at their lowest level since 2002.
"In Building Products, we did not experience the traditional seasonal pick-up in demand in the quarter. Even so, due to our low cost structure, declining input costs and our favorable mix of products, we generated $8 million of EBITDA in the quarter. We remain focused on matching our supply with our demand, lowering costs, generating cash and returning to profitability in this business.
"As we look forward, economic conditions, while still uncertain, appear to be stabilizing. The actions we have taken to improve asset utilization, drive down costs, match our production to our demand and profitably grow our business, position us to continue to deliver solid relative results."
Corrugated Packaging
Corrugated Packaging operating income was $91 million, a record second quarter. Earnings improved in second quarter 2009 compared with second quarter 2008 as lower mill and converting costs and the benefits of the PBL acquisition more than offset lower box volumes and prices. Operating results declined compared with the all-time record first quarter 2009 earnings due primarily to lower box prices, partially offset by lower costs and higher box volumes. (Source: Temple-Inland)
Metsaliitto Group posts 1H 2009 loss
(Espoo, Finland, 23 July 2009) Metsaliitto Group's operating result excluding nonrecurring items EUR -128 million in the first half of the year
1. Result for the first half of 2009:
- Sales EUR 2,492 million (1-6/2008: EUR 3,386 million).
- Operating result excluding non-recurring items was EUR -128 million (93).
- Operating result including non-recurring items was EUR -193 million (189).
- Result before tax excluding non-recurring items was EUR -181 million (-16).
- Result before tax including non-recurring items was EUR -257 million (80).
2. Result for the second quarter of 2009:
- Sales EUR 1,213 million (4-6/2008: EUR 1,676 million).
- Operating result excluding non-recurring items was EUR -61 million (33).
- Operating result including non-recurring items was EUR -56 million (105).
- Result before tax excluding non-recurring items was EUR -88 million (-18).
- Result before tax including non-recurring items was EUR -95 million (54).
3. Events in the second quarter:
Metsaliitto sold its holding in Vapo (49.9%) for EUR 165 million to a Finnish consortium led by EPV Energy and began, jointly with Vapo, to explore the possibilities for biofuel production in the Baltic Sea region.
Metsaliitto Group signed a letter of intent with UPM-Kymmene on 15 July 2009 concerning the new ownership structure of Metsa-Botnia.
M-real's structural change
In February 2009, M-real launched a new profit improvement programme with an annual target of EUR 80 million. The improvement actions target at savings in the business areas and streamlining the support functions to reflect the new company structure and size after the divestment of Graphic Papers. The full annual effect of the programme will be visible from 2011. The majority of the profit improvement measures relating to continuing operations are expected to be implemented in 2009, and the profit impact is estimated to be EUR 20-25 million in 2009. The related nonrecurring costs booked during 2009 are expected to be about EUR 18 million. M-real launched also a separate EUR 60 million programme to improve the 2009 cash flow including, e.g., the reduction of operating net working capital and cuts in investments.
In 2008, M-real announced to be planning the discontinuation of the standard coated fine paper production at the Hallein and Gohrsmuhle mills based on earlier examined strategic options. Both mills have been loss-making for a long period of time. At Hallein, Austria, paper production was discontinued at the end of April 2009. At the Gohrsmuhle mill, the standard coated fine paper production was discontinued in April. At Gohrsmuhle, Germany, the production of speciality papers as well as uncoated fine paper reels and folio sheets has been expanded. M-real continues to explore various options for the Hallein pulp mill.
Pulp
Pulp industry sales were EUR 585 million (810) in January-June, and the operating result amounted to EUR -90 million (120). The non-recurring items recognized in the first quarter totalled EUR -75 million and were related to the closure of the Kaskinen mill. Operating result including non-recurring items was EUR -165 million (120).
The market situation and the continued rapid decline in the price of pulp at the beginning of the second quarter played a major role in the decrease in net sales and the result. The result was also weakened by production curtailment shutdowns at all the mills in Finland. Some of the shutdowns resulted from market conditions, while others were annual maintenance shutdowns. Thanks to the extensive maintenance work carried out during the one-month shutdown at the Joutseno mill, the volume of renewable energy sold by the mill will increase by 20 per cent.
Foreign currency-denominated market prices for softwood pulp were, on average, 33 per cent lower compared with the first half last year. The average prices of hardwood pulp fell by 38 per cent. Pulp prices were at their lowest in April, when softwood pulp sold for USD 580 ad birch and eucalyptus pulp for USD 480. Prices have risen since, standing at USD 630 for softwood pulp and USD 500 for birch and eucalyptus pulp at the end of June. New, higher prices have been announced for July.
The close-down of old pulp mills continued around the world in the second quarter, and several mills restricted production due to the market conditions. At the end of the review period, global pulp stocks had dropped to near normal levels.
M-real's result includes 30 per cent of the Pulp Industry's operating result. 53 per cent of the Pulp Industry's figures are consolidated into Metsaliitto Group's financial statements. The letter of intent published in July will also change the consolidation of Metsa-Botnia. The deal is expected to be concluded in the last quarter. Metsa-Botnia will become an associate of M-real and a subsidiary of Metsaliitto and will consequently be fully consolidated into the Group's figures.
Board and Paper
The sales of Board and Paper totalled EUR 1,208 million (1,688), and the operating result excluding non-recurring items was EUR -135 million (13).
The operating result excluding non-recurring items decreased from last year's corresponding period due to the drop in delivery volumes following weaker demand, as well as the decrease in the values of product, wood and pulp inventories. The result was improved by price increases and cost savings.
The demand for folding boxboard increased steadily in the second quarter, and operating levels approached normal levels. Price increases are under consideration to be implemented in the main markets. The order volumes of uncoated fine paper have increased, but prices have declined. It now seems, however, that the decline in prices is coming to an end.
The demand for coated papers remains weak, but following the discontinuation of standard fine paper production in Hallein and Gohrsmuhle, coated papers are no longer significant to M-real.
M-real's net non-recurring items in January-June totalled EUR -56 million (95). Of these, EUR 22 million were related to the closure of the Metsa-Botnia Kaskinen mill, EUR 29 million to the closure of the Hallein paper mill, EUR 3 million to the streamlining of the sales network and EUR 2 million to various cost provisions.
Operating result including non-recurring items was EUR -191 million (108). Net interest and other financial expenses totalled EUR 10 million (70), income from associates was EUR -13 million (-1) and net exchange gains/losses recognized as financial items were EUR 2 million (1).
Tissue and Cooking Papers
The January-June sales of Metsa Tissue, which produces tissue and cooking papers, totalled EUR 435 million (461), and its operating result was EUR 41 million (20).
Sales were down some six per cent year-over-year due to changes in exchange rates (-4%) and lower sales volumes (-2%). The volumes of the company's own brands remained unchanged compared to the previous year. Both the company's own brands and private label brands were supported with summer campaigns and seasonal products.
Operating result improved thanks to the efficiency improvement measures implemented in 2007 and 2008 and to lower raw material costs. The operating result does not include non-recurring items.
In the second quarter, Metsa Tissue announced its intention to rebuild paper machine 10 at the Mantta mill. The investment will be carried out in the first half of 2010 and it will further improve the quality of the Lambi, Serla and Katrin brands sold in the Nordic countries.
Metsa Tissue has raised its energy efficiency and promoted sustainable development by enhancing its own operations. Energy efficiency was audited in Finland and Germany, and the companies in both countries were awarded energy efficiency certificates.
Near-term outlook
The demand for forest energy and logging sites predominated by roundwood will remain good in Finland. The pulpwood market is also expected to return to normal. Wood Supply will monitr development in the market for finished goods.
Prices of pine sawn goods have increased, and, due to smaller supply, the demand and supply should stay in better balance. Nevertheless, sawn goods production must be restricted if availability of wood raw material that is competitive in relation to the price level of finished goods is not sufficient in the autumn. The demand for plywood is not expected to improve this year, while the demand for KertoLVL depends partly on the extent to which stimulus measures will boost infrastructure construction. The costly raw materials purchased during earlier years have been mainly utilized which is expected to improve the result for the second half of the year.
Globally, pulp stocks are returning to normal, and the recent price increases suggest slight signs of positive profit development for the second half of the year. However, the near future is overshadowed by the low utilization rates of European and North American paper mills, as well as the support measures by the United States and Canada for their own pulp industries.
M-real's internal profit improvement programmes, combined with declining wood and chemicals costs, will ease the challenges related to profitability. The letter of intent concerning the sale of Metsä-Botnia's Uruguayan operations, published in July, will improve M-real's financial position, if it becomes definitive. However, the 2009 fullyear result will be weighed down by the considerable operational expenses incurred from reducing operations and making them more profitable. Despite some recent signs of improvement, M-real's operating result for 2009, excluding non-recurring items, will be clearly weaker than last year's result, due to the company's weak performance in the first part of the year.
The downturn notwithstanding, the sales volumes of tissue and cooking paper are expected to remain stable. The recession has had a bigger impact on the away-from home business than the consumer business. The latter has, in fact, shown growth potential in some segments and product categories. Higher raw material expenses and cautious growth expectations are predicted to make the latter half of the year more challenging than the first half.
Demand is expected to remain challenging. Metsaliitto Group will continue to seek profitability and cash flow through its efficiency improvement measures and restructuring. Despite some recent, minor positive signs, the 2009 operating result excluding non-recurring items will be clearly weaker than last year. (Source: press release)
Kimberly-Clark announces second quarter 2009 results and improved outlook for full year
(Dallas, U.S., July 23, 2009) Kimberly-Clark Corporation (NYSE: KMB) today reported that net sales in the second quarter of 2009 decreased 5.6 percent to $4.7 billion, as the effect of weaker foreign currency exchange rates more than offset organic sales growth of nearly 3 percent. The growth in organic sales was driven by higher net selling prices, which increased approximately 5 percent, partially offset by a decline in overall sales volumes of about 2 percent. The lower sales volumes reflect continued challenging economic conditions, particularly affecting the company's K-C Professional and Consumer Tissue businesses, along with the company's focus on improving net realized revenue. Meanwhile, sales volumes rose approximately 14 percent for K-C's global Health Care business.
Diluted net income per share for the quarter was $0.97 compared with $0.99 in 2008 and prior-year adjusted earnings of $1.03. During the quarter, the company delivered continued double-digit organic sales growth in developing and emerging markets, realized improved net selling prices in North America, and also benefited from lower costs stemming from commodity cost deflation and cost savings initiatives. These positive factors contributed to an increase in gross profit margin of approximately 350 basis points versus the year-ago quarter, more than offsetting certain higher costs, particularly for production curtailment and pension expense. Operating profit and earnings per share, however, were down compared with the prior year, mainly as a result of unfavorable currency effects of approximately 25 cents per share and severance costs to streamline the organization equivalent to about 19 cents per share. The increase in pension expense in the second quarter was equivalent to approximately 8 cents per share, as expected.
Adjusted earnings per share in the second quarter of 2008 exclude charges for strategic cost reductions and an extraordinary loss related to the restructuring of certain contractual arrangements. Additional detail on these items and further information about adjusted earnings per share and why the company uses this non-GAAP financial measure are provided later in this news release.
Chairman and Chief Executive Officer Thomas J. Falk said, "Business conditions remained challenging in the second quarter, as the economic environment and weak foreign currency rates continued to impact our results. However, the underlying strength of our business performance was encouraging, as we were able to mostly offset the significant drag from currency effects, higher pension expense and the charges for our organization optimization initiative. I'm particularly pleased with the improvement in gross margin, reflecting our focus on revenue realization and sustainable cost reduction. Moreover, we continued to deliver on our targeted growth initiatives, with double-digit organic top-line growth in developing and emerging markets and excellent results in Health Care. In addition, we continued to support our brands with new product innovations and an increase in strategic marketing spending of nearly $40 million in local currency terms. We also generated record cash flow, including strong benefits from our efforts to improve working capital. All-in-all, we made progress in a number of areas and expect to build on this performance with improved bottom-line results in the second half of the year."
Commenting on the outlook, Falk said, "We expect the external environment will remain challenging for the rest of the year. In this environment, we plan to continue to do what's right for the long-term health of the business by deploying our Global Business Plan strategies. We will continue to invest in our brands, pursue our targeted growth initiatives and build our key capabilities to drive sustainable growth. At the same time, we remain focused on increasing margins and maximizing cash flow. Our aggressive efforts to realize higher net selling prices and generatincremental cost savings are paying off. And while currency will continue to be a significant drag on our results, the expected impact for the year overall is slightly better than our previous assumption.
"All things considered, we are ahead of our plan for the year and are raising our earnings guidance accordingly. We now expect earnings per share in 2009 will be in a range of $4.10 to $4.25 per share. That's up from our previous estimate of $4.00 to $4.20, and includes the net drag of 15 cents per share from our organization optimization initiative. Our increased guidance demonstrates that we are executing well in a difficult environment and making excellent progress managing the factors we control. Earnings in the back half of the year should be up nicely compared to performance in the first half of the year and the second half of 2008." (Source: press release)
Billerud enters two of the world's largest fruit and vegetable markets, signed agreement with Rigesa of Brazil concerning production of corrugated boxes
(Solna, Sweden, 22nd July 2009) Billerud has signed a partnership agreement with Rigesa, a leading producer of corrugated boxes for fruit and vegetables in Brazil and India and part of global packaging solutions company MeadWestvaco Corporation. The agreement gives Billerud access to both the Brazilian and Indian fruit and vegetable markets.
Billerud has signed a partnership agreement with Rigesa, a leading producer of corrugated boxes for fruit and vegetables in Brazil and India. The agreement means that Rigesa will start to produce corrugated boxes with Billerud Flute, which forms the base of the strongest corrugated boxes and is based on 100% primary fibre. Billerud will thus gain access to the fast-expanding Brazilian and Indian fruit and vegetable markets. The partnership will also create opportunities to grow together with Rigesa on expanding markets. In addition to supplying paper to Rigesa, Billerud will offer optimized material selection and quality measurements during transport through its new concept Fresh Services. Customers will also be offered access to Billerud Box Lab where they can analyze box performance in damp environments.
"Together with Billerud we can offer our customers opportunities to create even more efficient packaging that reduces waste and maintains structural integrity. Billerud Flute is a high quality product of special interest to us. We see great possibilities in working together with a reliable and innovative supplier such as Billerud," says Armando Pimentel, Rigesa Product and Business Director.
The partnership is part of Billerud's strategy to advance higher up the value chain and create a global standard for fruit and vegetable packaging. Full-scale production at Rigesa will start this month.
"Through our new concept, Fresh Services, we have achieved success in the past two years. In the Netherlands for example, we've helped European fruit and vegetable importers and distributors to significantly reduce packaging-related waste by offering a comprehensive solution to ensure that fruit is transported in a protective way from grower to retailer. We now take this experience into Brazil and India, who are among the world's largest exporters of fruit and vegetables," says Lennart Eberleh, head of Billerud's Packaging Boards business area. (Source: Billerud AB)
NewPage expands ideal offset product and service offering
(Miamisburg, Ohio, U.S., July 21, 2009) NewPage Corporation announced today that Ideal Offset, a 92 bright, uncoated offset sheet, has expanded its offering to include 7 and 9 pt. Hi D, both caliper guaranteed products that meet USPS minimums for postal requirements.
In addition to the expanded offering, an inventory program out of Wagner Warehouse in Wickliffe , KY has been established for the most requested basis weights and sizes of Ideal Offset. This inventory program will allow for next day deliveries to cities within 500 miles of Wickliffe including: St. Louis , MO ; Milwaukee , WI ; Chicago , IL ; Columbus , OH ; Nashville , TN ; Atlanta , GA and more.
Ideal Offset is a consistent running uncoated sheet for demanding and trouble-free printing, offering superior versatility with premium attributes. Its excellent ink holdout and optimal opacity levels are perfect for applications such as annual reports, brochures, bulletins, coupons, flyers, newsletters and direct mail.
For more information about Ideal Offset, please contact your local NewPage merchant representative or visit us at www.NewPageCorp.com . If you would like samples, or an Ideal Offset kit containing plain paper samples and a product sell sheet, please call our sample department at 800.638.3313. (Source: NewPage Corporation)
Billerud returns to profit in the second quarter and prepares for new share issue
(Stockholm, Sweden, July 23, 2009) CEO Per Lindberg comments:
"After making losses in two successive quarters it is very pleasing to report an operating profit of MSEK 42 and a net profit of MSEK 8 for the second quarter.
The improvement is primarily due to increased volumes for kraft paper, significant cost savings, lower input costs and an improved currency situation. However, we are still suffering negative effects from currency hedging and, unfortunately, experiencing a negative margin for the approximately one fifth of Billerud's sales attributable to market pulp.
Despite this earnings improvement and a good order situation, uncertainty remains about the economic situation and development on the financial markets and thereby how this affects future levels of demand. Against this background among other factors the Board has decided to strengthen Billerud's balance sheet by proposing a rights issue with preferential rights for existing shareholders amounting to a total of around MSEK 1,000 before issue costs.
This rights issue will enable us to achieve a lower leverage more quickly, cut our financing costs and reduce financial risk. We also consider that a strong financial position will favor us on the market and give us greater opportunities to develop Billerud in both the short and longer term when the market returns to a more normal situation.
Since being launched on the stock market in 2001 Billerud has delivered an average return on capital employed and a return on shareholders' equity after tax of around 15%. For the past three years the return on capital employed has been 9% and the return on shareholders' equity 10%. Our aim and highest priority is to continue giving our shareholders a good return on the money they invest in Billerud."
January-June 2009 compared with same period in 2008
-- Net turnover was MSEK 3,807 (4,045), down 6%.
-- Net loss was MSEK -31 (187).
-- Earnings per share were SEK -0.60 (3.63).
-- Operating profit was MSEK 5 (328), representing a margin of 0% (8).
-- Currency hedging had a negative impact on operating profit of MSEK -193 (66) compared with if no hedging had taken place
-- A new share issue, with preferential rights for existing shareholders and worth a total of MSEK 1,000, will be proposed at an Extra General Meeting on 27 August 2009.
April-June 2009 compared with January-March 2009
-- Net turnover was MSEK 1,907 (1,900).
-- Net profit was MSEK 8 (-39), an improvement of MSEK 47.
-- Operating profit was MSEK 42 (-37), an improvement of MSEK 79, mainly due to lower price levels being compensated for by lower costs and a reduced negative effect of currency hedging.
-- An improved order situation has meant that there has not been a need to make any significant market related production curtailments following the large curtailment at the start of the year.
-- New significant order for Billerud Flute and for co-operation based on the Fresh Services concept on the markets in Brazil and India for fruit deliveries to Europe, was signed with Rigesa in Brazil.
Outlook for full year 2009
-- The order situation remained positive at the end of the second quarter, although uncertainty remains about the impact of the economic downturn on demand in the remainder of the year.
-- Prices in respective sales currencies remain under pressure.
-- Lower input prices primarily for wood and chemicals together with a significantly improved currency situation are expected to have a positive impact on profits as lower prices come into effect and old currency hedges are replaced with new ones.
-- Cost savings are continuing according to plan and are expected to amount to at least MSEK 250 annually by the end of 2009.
-- Inventories for market pulp on the global market have fallen in the second quarter, which helped to improve price levels. (Source: Billerud AB)
Scientists to build wood product DNA database
(Tokyo, Japan, July 22, 2009) The fight against illegal logging could be taken to the next level if scientists are successful in extracting DNA from wooden furniture to identify its origin, TTJ reports.
Double Helix Tracking Technologies (DHTT) is building the world's first bio-geographic tree database with support from the Singapore government for merbau, one of the most vulnerable hardwoods.
The company has brought together an international team of genetic scientists to build the database and perfect methods to extract DNA from wood products.
"The tree DNA strad or ?genome' is 60-100 times longer than a human one," said Kevin Hill, CEO of DHTT. "It will be possible to match even the degraded DNA found in processed wood product against the database to determine its true origin." (Source: press release)
Catalyst Paper refinances $75M of debt related to energy JV
(U.S., July 21, 2009) Catalyst Paper said that its hydro joint venture, Powell River Energy Inc., has successfully raised $95 million of first mortgage bonds maturing in July 2016 to refinance $75 million of non-recourse debt due on July 24, 2009.
The new bonds are priced at an interest rate of 6.45%, payable semi-annually, Catalyst said.
The deal is scheduled to close on July 24, 2009.
Catalyst said that it holds a 50 percent interest in Powell River Energy Inc. with Great Lakes Hydro Income Fund holding an equivalent stake.
After fees and other expenses, the additional $18 million in funds raised in this refinancing is to be distributed equally to the joint venture partners, Catalyst added. (Source: Catalyst Paper)
Stora Enso's capital distribution decided
(Helsinki, Finland, 22 July 2009) Stora Enso's Annual General Meeting (AGM) on 1 April 2009 approved a proposal by the Board of Directors that in lieu of a dividend, EUR 0.20 per share of capital, in total EUR 157 907 699.80, be distributed to the shareholders from the share premium fund of the parent company following the Finnish National Board of Patents and Registration's consent to the respective decrease in Stora Enso's share premium fund.
The Finnish National Board of Patents and Registration has confirmed pursuant to the provisions of Chapter 14 of the Finnish Companies Act that Stora Enso can decrease Stora Enso's share premium fund by in total EUR 157 907 699.80. The schedule for distribution of the funds has now been confirmed as follows:
- ex-date 29 July 2009
- record date 31 July 2009
- payment date 10 August 2009 (Source: press release)
PaperlinX market update: downgrades profit
(Australia, 22 July 2009) The timing of the completion of the sale of Australian Paper to Nippon Paper will result in a delay in the release of audited accounts for PaperlinX Ltd ("PaperlinX") for the year ended 30 June 2009 until August 31.
Based on preliminary and unaudited management accounts, indications are:
PaperlinX now expects full year divisional Earnings before Interest and Tax (reported EBIT before Corporate and significant items) to be in the order of 50% lower than in the prior year, compared with previous guidance of 30% to 35% lower. This result includes the profit on sale of Netherlands properties booked in June; various restructuring activities that occurred through the year to further reduce the cost base going into the new financial year, and is before consideration of any impairment reviews.
The results for Paper Manufacturing (comprising 11 months for the business sold, with completion accounts yet to be finalised, and 12 months for the Tasmanian operations) were negatively impacted in recent months by the stronger A$ and softer pricing across many export grades.
Merchanting expenses show a significant favorable variance versus the prior year and prior expectations through successfully targeted cost reduction programmes across all regions, but are insufficient to mitigate the worse than expected market driven volume weakness seen in the last six weeks of the year in Europe and North America.
In this environment, PaperlinX made strong progress on working capital reductions and cash management in the second half, and now expects that net debt at 30 June 2009 will be around $220 - $250 million; 30% lower than previous guidance of $327 million.
As previously announced, reported EBIT before significant items for 2009 will be further reduced by around $95 million in costs relating to ongoing corporate overheads, previously announced FX losses and bank/note holder charges, consultants' costs for lenders and related waiver fees and will also include a loss on sale adjustment of approximately $(150) million.
PaperlinX also recorded an impairment in the carrying value of the fixed assets of Australian Paper of $(567.5) million in its interim results. (Source: press release)
U.S. printing & writing paper shipments down 20% in June 2009
(Washington, U.S., July 21, 2009) The American Forest & Paper Association today reported total printing-writing paper shipments decreased 19.6% in June 2009 compared to June 2008. For the year to date, shipments were down 22.7%.
According to AF&PA's June 2009 Printing-Writing Paper Report, U.S. purchases (shipments + imports - exports) of printing-writing papers dropped 21.8% in June versus year-ago June and declined 24.1% for the year to date.
Total printing-writing paper inventory levels in June decreased 22,600 tons, or 1.1%, from May, as uncoated paper inventory declines more than offset coated papers inventory increases.
Coated Free Sheet
First half 2009 uncoated free sheet (UFS) shipments were lower than first half 2008. UFS shipments were down 15.6% compared to June 2008, to 815,500 tons. While the June decrease is the largest in the past four months, June 2008 shipments were the second highest recorded in 2008 ? the highest was January 2008.
For the first half of 2009, UFS shipments were 15.2% below last year. U.S. purchases of UFS were also down, declining 16.1% when compared to June 2008.
UFS inventories decreased 4.8% compared to last month, a decline of 51,800 tons.
Coated Free Sheet
Coated free sheet (CFS) shipments declined sharply for the sixth consecutive month. CFS shipments dropped by 27.5% compared to June 2008, to 280,900 tons. For the year to date, shipments of CFS were down 29.0%. U.S. purchases of CFS decreased even more, down 33.8% compared to last June and were off 32.1% for the year to date.
CFS inventories increased 5.3% compared to May, an increase of 32,600 tons.
Coated Mechanical
The decline in coated mechanical (CM) shipments slowed, but remained in double-digits. CM shipments fell 16.6% when compared to June 2008, settling in at 280,700 tons. Year to date shipments of CM were down 32.7% compared to last year. U.S. purchases of CM were down 20.2% compared to June 2008, and for the year to date were down 33.6%.
CM inventories increased 2.4%, or 6,900 tons, from last month.
Uncoated Mechanical
Uncoated mechanical (UM) shipments declined by more than 20% compared to 2008 for all six months of 2009. UM shipments decreased 28.8% when compared to June 2008, to 142,400 tons, and for the year to date were down 27.6%. U.S. purchases of UM were down 24.5% when compared to June 2008 and were down 25.0% for the year to date.
UM inventories decreased 10.2%, or 10,400 tons, from May. (Source: American Forest & Paper Association)
PULP USD VALUES CONTINUE TO RISE; CHINESE DEMAND UP
| EUROPE : | | Wednesday July 22, 2009 | Currency | | From prev. week | From beg. of year 2009 |
| PIX NBSK | USD 644.21 |
 | USD + 6.57 | USD + 20.24 |
| PIX NBSK | EUR 457.21 |
 | EUR - 1.49 | EUR + 7.21 |
| PIX BHKP | EUR 373.07 |
| EUR - 1.50 | EUR - 42.93 |
| PIX BHKP | USD 525.66 |
| USD + 4.97 | USD - 51.17 |
| PIX LWC | EUR 692.96 |
| EUR - 1.08 | EUR + 10.24 |
| PIX Ctd WF | EUR 691.31 |
| EUR - 2.29 | EUR + 6.38 |
| PIX A4 B-copy | EUR 804.87 |
| EUR - 2.59 | EUR - 36.63 |
| PIX Newsprint | EUR 518.44 |
| EUR + 0.41 | EUR + 23.99 |
| PIX Kraftliner | EUR 389.70 |
| EUR + 0.23 | EUR - 95.17 |
| PIX White-top Kraftliner | EUR 607.07 |
| EUR - 0.56 | EUR - 85.43 |
| USA : | | Wednesday July 22, 2009 | Currency | | From prev. week | From beg. of year 2009 |
| PIX Testliner 2 | EUR 272.97 |
| EUR - 0.33 | EUR - 106.23 |
| PIX Testliner 3 | EUR 248.26 |
| EUR - 0.30 | EUR - 90.69 |
| PIX RB Fluting | EUR 237.78 |
| EUR - 0.15 | EUR - 89.67 |
| PIX OCC 1.04 dd | EUR 52.39 |
 | EUR 0.00 | EUR + 17.86 |
| PIX ONP/OMG 1.11 dd | EUR 76.69 |
| EUR - 0.02 | EUR - 5.85 |
| PIX US NBSK | USD 686.63 |
| USD + 2.40 | USD - 39.71 |
| PIX US Newsprint 30 lb | USD 492.91 |
| USD 0.00 | USD - 256.72 |
| PIX US Newsprint 27 lb | USD 527.85 |
| USD 0.00 | USD - 271.41 |
| PIX BHKP China | USD 488.33 |
| USD + 3.40 | USD + 49.22 |
| PIX BHKP China | RMB 3336.14 |
| USD + 22.70 | USD + 340.08 |
(Source - FOEX Indexes Ltd)
Paper & forest products companies to post weak Q2: analyst
(New York, U.S., July 21, 2009) Raymond James said it sees a weak second-quarter ahead for paper and forest products companies, citing little commodity pricing relief and the pronounced fall in the U.S. dollar.
"With the exception of Asia, demand for forest products remains moribund, necessitating a focus on production curtailments and cost reduction strategies," analyst Daryl Swetlishoff wrote in a note to clients.
The typical spring run-up in building material commodity prices was muted, given an excess of unsold inventories and the recession that continued to depress new housing starts in the United States, Swetlishoff said.
The analyst said building materials stock prices have now come "full circle" with several now touching previous troughs.
However, Swetlishoff said retreating stock prices had improved valuations, prompting him to upgrade several stocks including those of Norbord Inc (NBD.TO: Quote) and West Fraser Timber Co Ltd WFT.TO to "market perform" from "underperform."
But, the analyst remained cautious on the outlook for paper and forest products companies over the next six to 12 months, citing the risk of a weaker greenback and lack of visibility on improving fundamental demand.
Swetlishoff does not expect a near-term resurgence in demand for pulp and paper commodities, noting that they tend to be late cycle performers.
The analyst, however, highlighted that the Canadian government's C$1 billion "Green Transformation Program" has the potential to improve longer-term economics for select Canadian pulp producers like Canfor Pulp Income Fund (CFX_u.TO: Quote) -- which could be "a key beneficiary."
The analyst upgraded Canfor's stock to "outperform" from "market perform." (Source: Reuters)
Brazil: VCP beats on record pulp sales
(New York, July 20, 2009) On Friday Votorantim Celulose e Papel S.A. (VCP), leading Paper Company in Brazil, reported second quarter 2009 results.
During the quarter, pulp sales volumes reached a new record of 516,000 tons, which was 10% above the guidance and 48% higher than the previous quarter and 57% year over year. Paper sales volume was in line with guidance, totaling 90,000 tons, up 13% sequentially and 3% year over year.
During the quarter EBITDA increased 7% sequentially but decreased 24% year over year and reached R$158 million with a 23% margin from 26% in the first quarter of 2009 and 34% in the second quarter of 2008.
The company reported a net financial income of R$465 million mainly due to the appreciation of the Real against the US dollar and its positive impact on debt. Net profit totaled R$533 million, including equity gain derived from the 24.7% stake sale in Aracruz Celulose's (NYSE: ARA - News) total capital in April and 42.6% in May and June.
The company benefited from the increase in Chinese consumption during the first five months of 2009. Although global market pulp consumption decreased 6.6%, Chinese consumption increased 66%. This helped to reduce the world inventories of pulp producers to 34 days, versus 43 days in March and 50 days in January 2009. Capacity closures and downtimes reduced the supply of pulp by approximately 2.65 million tons in the second quarter.
Weaker world supply and strong demand from China allowed the increase in list prices in June, to US$530/ton Europe, US$590/ton North America and US$520/ton Asia (excluding China, where the net price is US$480/ton).
However, the slower economic growth worldwide and a recession in the U.S. remain a threat to international commodity prices in general and pulp in particular. Moreover, the difficulties in the acquisition of the shares of Aracruz held by Arapar, the huge loss of Aracruz in the currency market and the liquidity problems that this loss will bring are matters of huge concern.
However, based on increase in demand for pulp and paper in China we are maintaining our Hold recommendation on VCP with a target price of US$12.75. (Source: Aracruz Celulose SA / Zacks Equity Research)
Lee & Man Paper FY09 Net Profit HK$302 Mln
(Hong Kong, July 20, 2009) Lee & Man Paper said its annual net profit was HK$302 million for the year ended 31 March 2009, down 79% year-on-year. However, turnover rose 7.3% to HK$9.65 billion. Earnings per share were 26.56 HK cents versus 127.22 HK cents. The board does not recommend any final dividend, compared to 10 HK cents per share last year.
During the year, the group recorded unprecedented losses in the third quarter due to global financial tsunami resulting in a sharp contraction of the market and drop in selling prices which greatly impacted on the group's full year results.
The group's PM12 in Hongmei plant and PM13 in Chonqging plant commenced production in the year, boosting total annual containerboard capacity to 3.76 million tons. As the global economic situation slowly improves, the group's fourth quarter performance was back within normal range in terms of sales volume and profitability.
The management believes that the worst is definitely over. The group's 165,000 tons per annum pulp production line at Chonqging plant is now in trial production phase. While not increasing the debt level, the group is now planning to start PM16 to meet the growing demands of containerboard. Further, the group will start the production of fine paper to take full advantage of our own forest and pulp resources. (Source: Media report, Hong Kong)
Sappi Trading Update in respect of debt refinancing and bond issue
(Johannesburg, South Africa, July 20, 2009) Sappi (NYSE: SPP) is issuing this trading update in connection with the capital markets transaction that it announced today and the ongoing syndication of a new secured revolving credit facility and a new secured OeKB term loan facility.
Market conditions remained weak in the quarter in all our major markets. Sales volumes for the group were similar to the prior quarter. Prices realized were under pressure in most regions.
For the quarter ended June 2009 we expect to report improved operating results, excluding special items, compared to the quarter ended March 2009 for our European business, which we expect to return to profitability and for our North American business, as a result of synergy achievements in Europe, and cost and input price reductions. In addition the North American business expects to report the benefit of alternative fuel credits in the range of US$30 - US$40 million.
Our Southern African business was impacted by the strengthening of the Rand relative to the US Dollar, weak domestic demand and low pulp prices, which we expect will result in a loss before special items for the quarter for the region.
For the group, operating loss excluding special items for the quarter is expected to be largely in line with the quarter ended March 2009.
The group continues to prioritize cash generation and expects to report a positive net cash generation for the quarter.
Financial statements for the quarter ended June 2009 are not yet finalized. The information above is based on certain preliminary financial data. This information is subject to change as final financial data becomes available, and our financial statements are prepared and reviewed by us and our auditors.
Outlook:
Demand and prices for chemical cellulose have strengthened and the Saiccor mill has a strong order book. The mill is progressing well with the ramp up of production and expects to improve sales volumes in the next quarter. Global markets for coated paper remain depressed; however, we expect stronger seasonal demand during the next quarter for web products and stable demand for sheet products. The extent of inventory reduction in our customer supply chain appears to be reducing and we therefore expect an improvement in coated paper demand on paper producers. We expect alternative fuel credits of approximately US$40 million in the next quarter.
We expect to generate positive net cash flow in the quarter ended September 2009. (Source: press release)
Pira International and TAPPI Partner for "Specialty Papers Conference 2009" to be held November 2009
(Portland, Maine, U.S., July 20, 2009) For the first time, Pira International and TAPPI are joining forces to produce Specialty Papers Conference 2009 (http://specialtypaperconference.com), focusing on the current state of the market and the latest technology and application developments in the specialty papers arena. The conference will take place from Tuesday, November 3 through Thursday, November 5, 2009 at the Embassy Suites Downtown Lakefront in Chicago, Illinois.
TAPPI and Pira International are proud to announce the Advisory Committee for this conference: Dr. Frank Adamsky, market development manager for Daikin's Unidyne(TM) products; David B. Cutler, Expert Process Engineer at Domtar Inc.; Charles P. Klass, president of Klass Associates Inc.; Kenneth L. Patrick, pulp & paper publications technical lead for TAPPI; Frank Perkowski, president of Business Development Advisory (BDA); and Thomas E. Rodencal, president of Rodencal Paper Consulting Inc. The advisory committee plays a key role in determining the topics covered at the conference and developing the program.
"We are pleased to have such a top-notch group of leaders from the specialty papers industry on board for this conference," said Patrick, of TAPPI. "They bring to the table an in-depth understanding of both the markets and production technologies that are shaping this rapidly evolving sector of the global paper industry. Their extensive, focused experience spans the four major segments being covered at this year's conference--flexible grades, printing papers, heavyweights, and technical specialties--and the emerging green/sustainability drivers that are revolutionizing the specialty papers marketplace worldwide."
Barbara Rojas, conference producer for Pira International, noted that "in addition to providing networking opportunities, attendees will hear from end users, paper mills, technology providers, and suppliers of materials and equipment on the breakthroughs in specialty papers applications in a number or industries, including labels, flexible packaging, inkjet paper, release liners, security papers, and filtration. This year's conference will be a must-attend for anyone in the specialty papers industry." For more information about Specialty Papers Conference 2009 or to attend, visit http://www.specialtypaperconference.com. For inquiries about possible speaker opportunities, please contact Barbara Rojas +1 207 781 9608 or Barbara(dot)Rojas(at)pira-international(dot)com.
About Pira International Pira International's media brand IntertechPira provides events, training, online information and publications across a wide range of niche commodities and disruptive technologies affecting industry. Our 100% independent products are provided globally 24/7 and delivered by teams of independent experts at sites in Portland, Maine, US and London, UK through 20 specialized industrial platforms. Our core competencies are information on: research and product development; globalization and new markets; production methods; regulatory and compliance.
About TAPPI is the leading association for the worldwide pulp, paper, packaging and converting industries and publisher of Paper360deg. Through information exchange, events, trusted content, and networking opportunities, TAPPI helps members elevate their performance by providing solutions that lead to better, faster, and more cost-effective ways of doing business. Visit www.tappi.org. (Source: press release)
Change in Ahlstrom's Corporate Executive Team
(Helsinki, Finland, July 20, 2009) Ahlstrom Corporation, a leading manufacturer of specialty papers and nonwovens, announces a change in its Corporate Executive Team. Senior Vice President Paul Marold, who is responsible for Ahlstrom's Advanced Nonwovens business area, has elected to resign from Ahlstrom's service in order to pursue other career opportunities. He will leave his position by August 14, 2009.
The Advanced Nonwovens business area will be led by Risto Anttonen, Deputy of the President & CEO, on an interim basis until a permanent successor has been appointed.
Ahlstrom's Advanced Nonwovens business area develops and manufactures nonwoven materials for the food packaging and medical industries.
"I would like to extend my thanks to Paul for his excellent contribution for Ahlstrom and wish him the best of success in his future career", states Jan Lang, President & CEO of Ahlstrom. (Source: Ahlstrom Corporation)
Sappi Fine Paper North America joins EPA program
(Johannesburg, South Africa, July 20, 2009) As part of its commitment to operating sustainably, today Sappi Fine Paper North America announced that it has joined the U.S. Environmental Protection Agency's (EPA) SmartWay(SM) Transport Partnership and re-qualified its Cloquet Mill with the Center for Resource Solutions as a certified Green-e Energy organization for 2009-2010. In addition, Sappi also has announced its emissions data, which has been calculated in accordance with the Greenhouse Gas Protocol. These best practices are just some of the many initiatives that Sappi Fine Paper North America has adopted as part of its commitment to sustainability and to reducing its impact on the environment.
The SmartWay(SM) Transport Partnership is an innovative collaboration between the U.S. Environmental Protection Agency (EPA) and companies that provide and hire freight delivery services, and is designed to increase energy efficiency while significantly reducing greenhouse gases and air pollution. Sappi Fine Paper North America qualified as a certified shipper within the Partnership, after submitting an environmental assessment of its freight operations to the EPA and committing to improving its performance within three years while tracking progress on an annual basis.
As a SmartWay(SM) partner, Sappi Fine Paper North America will contribute to the SmartWay(SM) Transport Partnership's goal to cut carbon dioxide emissions by 33 to 66 million metric tons, and nitrogen oxide emissions by up to 200,000 tons per year, by 2012. This is comparable to removing up to 12 million cars from the road each year. Carbon dioxide is the most common greenhouse gas, and nitrogen oxide is an air pollutant that contributes to smog.
Sappi Fine Paper North America also re-qualified its Cloquet Mill in Minnesota this year with the Center for Resource Solutions as a Green-e Energy organization. Green-e is the nation's leading, independent, third party certification and verification program by Green-e Marketplace for renewable energy in the U.S., ensuring that strict environmental and consumer protection standards are met. Under the Green-e certification, 100% percent of the electricity used to manufacture the following products at the Cloquet Mill is certified renewable energy generated onsite by Sappi: McCoy sheets and digital; LOE; Opus sheets and digital; Flo sheets and digital; and Opus web with 30% post-consumer waste .
"Sappi Fine Paper North America is proud of its industry leading environmental position and is dedicated to continuous improvement, which includes securing third party environmental qualifications such as our new certification with SmartWay(SM) Transport and renewed certification status as a Green-e Energy organization," said Jennifer Miller, Executive Vice President of Marketing and Communications, Sappi Fine Paper North America.
More than 90% of electricity used currently by Sappi's coated fine paper mills in Cloquet, Minn. and Skowhegan, Maine, is generated on site, primarily from renewable resources. As a result, in 2008, Sappi had a lower carbon footprint than the industry average-- 83% of the total energy for these two mills came from renewable sources compared to the industry average of 64% use of energy from renewable sources, as reported by AF&PA in 2006. Furthermore, through a series of environmental initiatives, Sappi Fine Paper North America has reduced its CO2 emissions from fossil fuels by 27% from 2004 to 2008. Sappi's emissions reduction has not only already met but has exceeded a proposed legislative target of greenhouse gas reductions of 17% by 2020 from 2005 levels (as set forth in the American Clean Energy and Security Act (H.R. 2454), recently passed by the U.S. House of Representatives and headed to the U.S. Senate).
In addition, Sappi Fine Paper North America has also conducted a comprehensive analysis of its operations in accordance with the Greenhouse Gas Protocol, the most widely used international acounting tool for government and businesses to measure and manage greenhouse gas emissions. This analysis shows that the Cloquet Mill emits 0.20 tons of CO2 per ton of product (pulp and paper) and the Somerset Mill emits 0.47 tons of CO2 per ton of paper. The results reflect emissions from the mill and those associated with purchased power.
"We encourage our customers to survey their supply chain and ask for the greenhouse gas emissions data, as the data will reveal that Sappi Fine Paper North America has one of the lowest carbon footprints among coated free sheet manufacturers in North America," Laura Thompson, Ph.D., Director of Sustainability and Technical Marketing, Sappi Fine Paper North America. (Source: Sappi Fine Paper North America)
Pemco: SHM 1450 DR for SureCut Converting
(Canada, 17 July 2009) This highly flexible machine can sheet traditional paper and board products as well as a wide range of other rolled materials.
The newly installed SHM 1450 DR will cut any web up to 144.8 cm wide with a tolerance of +/- 0.015" (+/- .381 mm). With a knife load for the cross cutting head of up to 1,000 g/m2 and 600 g/m2 at the slitter stations, the dual rotary system can handle significantly more capacity with a much greater accuracy than a single rotary system. The cross-cut knife system is a state-of-the-art "synchro" cutting head offering top quality cutting and a high profile speed curve.
SureCut has the option of working with three shaftless unwind back stands, enabling their new sheeter to run three webs at a time. In addition, the machine has been fitted with a fully automated stacker that supplies press-ready pallets of sheeted product. It also features a non-stop pallet change system, a feature which has helped SureCut to improve their efficiencies considerably.
"Pemco has been very helpful in regards to offering their expertise when we investigated a new material that we would like to sheet on their equipment," says Paul Higgins. During the test phase at the Sheboygan facility, Pemco tested a 148 g/mē text weight and 230 to 250 g/mē cover stock for SureCut. After some fine tuning the machine was ready for delivery.
The market in the metropolitan Toronto area is very aggressive. "The new SHM 1450 DR gives us an edge on the competition", adds Higgins, "because we are the only contract sheeting company in Canada with a high speed machine that can produce a high quality sheet 205.7 centimeters long. We are now able to assist our customers in supplying large format printers to the northeastern market." (Source: press release)
Voith Paper: OnQ ModulePro nozzle moisturizer available in compact size
(Helsinki, Finland, 14 July 2009) Therefore, Voith Paper Automation has come up with a new layout of the proven product: OnQ ModulePro compact, the "perfect fit" solution for paper machines with a maximum speed of 1,500 m/min and a paper web width of up to 8,500 mm.
It features a simpler technical solution for the spray beam which is available with at most two rows of nozzles and with zone widths of 50 or 75 mm. In addition, no suction station is required for these simpler applications. Despite all technical reduction, it improves the moisture cross profile quality due to its innovative nozzle and valve technology, which for years has been the benchmark in the paper industry.
Due to the uniformly fine rewetting and the optimal CD moisture profile, it meets the highest quality requirements. A homogeneous moisture distribution and reduced curling tendency are the result. The advantage: Fewer complaints from the printing plants, since the runnability of the end product is considerably improved. (Source: press release)
Brazil's VCP Q2 profit jump
(Sao Paulo, Brazil, July 16, 2009) 2Q09 Highlights:
-- Pulp Market: China has maintained its significant import volumes in 2Q09. On a year-to-date
basis until May, shipments to the country have increased by 66%1 over the same period of 2008, reducing world inventories of pulp producers to 34 days, versus 43 days in March and 50 days in January 2009;
-- Capacity closures and downtimes reduced the pulp supply by approximately 2.65 million tons in the second quarter2. The scenario of weaker world supply and strong demand from China allowed for a new increase in list prices in June, to US$530/t Europe, US$590/t North America and US$520/t Asia (excluding China, where the net price is US$480/t);
-- Pulp sales volumes reached a new record, 516,000 tons in 2Q09, 10% above the guidance and 48% higher than in 1Q09, with additional pulp from the Tres Lagoas mill and record sales to China in June;
-- Paper: domestic demand for the papers produced by VCP presented decrease in the first five months of 2009 when compared to the same period of 2008. However, VCP market share in all the paper grades, mainly specialties and coated segments, has increased;
-- Paper sales volume was in line with the guidance, totaling 90,000 tons, 13% higher than 1Q09 due to the sector's seasonality;
-- In 2Q09, EBITDA totaled R$158 million, with a 23% margin. If we exclude the nonrecurring effects the margin would have been 26%;
-- Net financial income totaled R$465 million due mainly to the appreciation of the Real against the US dollar and its positive impact on debt. Net profit totaled R$533 million in the quarter;
-- Horizonte Project: production volume of 230,000 tons in 2Q09, of which 148,000 tons (64%) were sold;
Brazilian pulp and paper company Votorantim Celulose e Papel (VCPA4.SA) said late on Friday its second-quarter profit nearly quadrupled because of increased sales and foreign exchange gains from a stronger local currency.
VCP (VCP.N), as the company is called, said in a statement net income surged to 533 million reais ($276.45 million) from 135 million reais a year earlier. Net revenue rose nearly 10 percent to 689 million reais on record sales volumes to China in June.
The company said it booked net financial gains of 465 million reais in the second quarter, compared with 110 million reais a year earlier. A 16 percent surge in Brazil's currency, the real BRBY, in the period helped increase foreign exchange revenue that more than made up for interest payments and other financial expenses.
Shares of VCP, which took over rival Aracruz Celulose (ARCZ6.SA) (ARA.N) in a deal valued at 5.4 billion reais earlier this year, rose 1.8 percent on Friday to close at 23.1 reais.
VCP also said it earned 218 million reais from its stake in Aracruz, which reported a second-quarter profit of 595.5 million reais on Thursday.
Earnings before interest, taxes, depreciation and amortization, a measure of cash generation known as EBITDA, fell to 158 million reais from 212 million reais in the second quarter of 2008. ($1=1.928 reais) (Source: Reuters / press release)
Canadian pulp and paper company downgraded to Ca by Moody's
(Montreal, Canada, July 17, 2009) Moody's Investors Service today lowered the Probability of Default Rating (PDR) on the Restricted Group (Mercer) of Mercer International Inc. to Ca from Caa1, following the company's announcement on July 13, 2009 that it has commenced an exchange offer on its 8.5% convertible senior subordinated notes due October 2010 (unrated by Moody's). All ratings remain on review for possible downgrade, where they were placed on June 23, 2009.
The downgrade in the PDR to Ca reflects a heightened probability of default on Mercer's convertible senior subordinated notes. Moody's definition of default includes distressed exchanges and if the proposed exchange is successfully completed, Moody's would likely deem the transaction as a distressed exchange. According to the company's July 13, 2009 press release, Mercer is offering to exchange the existing notes for 129 shares of Mercer common stock, a $200 premium in new 3% convertible senior subordinated notes due 2012 and accrued and unpaid interest.
The review for possible downgrade continues to focus on Mercer's medium-term liquidity and the viability of its capital structure, including whether financing is obtained for Celgar's green energy project, the potential impact of the Canadian Pulp and Paper Green Transformation Program, and Mercer's refinancing plan for the upcoming debt maturities of its Celgar and Rosenthal revolving credit facilities which mature in February and May 2010. Additionally, Moody's will review the final terms of the exchange offer, if completed, and its impact on the company's capital structure and cash requirements going forward.
Moody's downgraded the following rating which remains on review for possible downgrade:
Probability of Default Rating, to Ca from Caa1
The below ratings remain on review for possible downgrade:
Corporate Family Rating, Caa1
$310 million 9.25% senior unsecured notes due February 2013, Caa2 (LGD4, 58%)
The last rating action occurred on June 23, 2009 when Moody's downgraded Mercer's CFR and PDR to Caa1 from B2 and placed all ratings on review for possible downgrade. The principal methodology used in rating Mercer was Global Paper & Forest Products Industry, which can be found at www.moodys.com in the Credit Policy and Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating Mercer can also be found in the Credit Policy & Methodology directory.
Mercer International Inc., a Washington-based corporation with corporate offices in Vancouver, British Columbia, is a global producer of NBSK pulp. Moody's ratings cover the Restricted Group, which includes the Celgar and Rosenthal pulp mills but excludes the Stendal mill. Annual production capacity of the Restricted Group is approximately 820,000 ADMTs (air-dried metric tones) and revenue for the twelve months ended March 31, 2009 was EUR391 million. (Source: Mercer)
NewPage to discontinue biofuels gasification project with Chemrec AB of Sweden
(Miamisburg , Ohio, U.S., July 17, 2009) NewPage Corporation announced today its decision to discontinue work on the biofuels gasification project at the Escanaba, Michigan pulp and paper mill.
The plan, which would produce methanol and dimethyl ether from the gasification of kraft pulp black liquor, was announced in August of 2007 in partnership with Chemrec AB of Sweden . Chemrec has proprietary technology and had approached the Michigan Economic Development Corporation ( MEDC ) looking for a United States partner. A three phase study was outlined at that time, with the ability for either company to opt out at the conclusion of each phase.
"While this type of new technology is exciting to consider, unfortunately the escalating cost of the installation of the Chemrec process and the substantial investment required to modify our existing operations precludes us from proceeding with this project," said Rick Willett, president and chief executive officer for NewPage.
"Unlike Europe, the demand for methanol and dimethyl ether as transportation fuels has not developed in North America . The lack of demand for these products in our country doesn't support the feasibility of the project. To be a viable project, the costs for the installation would need to be much lower and the current market prices for methanol and dimethyl ether would need to improve as well," added Willett.
Throughout the timeframe of this endeavor, the NewPage team has worked closely with Chemrec officials, Senator Debbie Stabenow, Governor Jennifer Granholm and the MEDC , as well as numerous other state and local officials. "We appreciate the dedication, involvement and support from everyone who worked on this project," commented Willett. "As biofuel gasification develops, United States energy policy evolves, and the economy improves, it is a possibility that NewPage could revisit the technology in the future."
Chemrec has operated a pilot plant in Pitea , Sweden for two years and recently announced a full scale production plant at another location in Sweden . (Source: NewPage Corporation)
U.S.: Containerboard: will pricing hold in 2nd half?
(New York, July 17, 2009) While most sectors of the paper industry have felt the sting of the tough economy, containerboard producers have weathered the recession in remarkable fashion, says Mark Wilde, senior analyst at Deutsche Bank.
But, they've got a ways to go.
After polling a variety of trade contacts, Wilde feels prices will remain stable through July because there has been no evidence of recent erosion in domestic spot market prices (June prices: corrugating medium $510/ton, linerboard $540).
But, he's not convinced prices have bottomed for the cycle. "We're even less swayed by arguments about a prospective pricing initiative this autumn," Wilde notes.
"In our survey, most boxmakers and containerboard brokers point to continued sluggish volumes over the past 3-4 weeks. In our view, an autumn price hike in the wake of weak demand and low input costs is hard to reconcile," Wilde said.
"Moreover, we won't be shocked by modest price ($20-40/ton) erosion over the next 6-8 months," he added.
Wilde believes the first realistic shot at a price increase is most likely February/March of 2010. (Source: Deutsche Bank Analysts)
Unions fight for Tasmanian paper mills to stay open
(Hobart, Australia, July 18, 2009) Taxpayers are being asked to rescue from closure two unprofitable Tasmanian paper mills employing 500 workers in one of the country's most marginal electorates.
Mill owner PaperlinX, backed by two unions, hopes a federal review of the pulp and paper sector will throw a lifeline to the Burnie and Wesley Vale mills.
At least, the unions say, support to keep the mills operating for another two or three years would allow workers to transfer to the Gunns pulp mill, should it be built.
The future of the mills in Tasmania's northwest is a key item on the agenda of the federal government's Pulp and Paper Industry Strategy Group.
It appears only government assistance, or a last-minute buyer, can save one or both of the mills from closure.
They are in or bordering Braddon, a key swing electorate that fell to Labor by a slim margin in 2007, while the state seat of the same name is a battleground for the looming state election.
Both levels of government are aware of the mills' precarious position, and their general manager, Jon Ryder, has been appointed to the PPISG.
"We are not going to make a decision until we have clarity on the path going forward and that does include our ability to source some funding if possible from the state and federal governments," Dr Ryder said.
The Australian Manufacturing Workers Union and the Construction Forestry Mining and Energy Union are represented on the PPISG and hope it will find a solution for the mills.
A $250,000 war chest has been created by the CFMEU to fight any closure.
The mills, part of the physical, social and economic landscape of northwest Tasmania for decades, were left out of the sale of PaperlinX business Australian Paper to Nippon Paper Group last month. Workers say lack of investment in equipment made the mills less attractive to Nippon and other potential buyers. (Source: The Australian)
Unilin's Mouscron mill shut down in mid-June
(New York, U.S., July 17, 2009) Unilin, part of the US flooring group Mohawk, shut down the Mouscron laminate flooring works in mid-June, EUWID reported. A corresponding decision had already been announced in April.
Laminate flooring production in Mouscron was primarily geared to products with a V-shaped groove. A social plan for the 73 affected employees was agreed in mid-May; this agreement had been preceded by long and arduous negotiations between the Unilin management and the FGTB and CSC unions. (Source: EUWID)
Stora Enso to take steep Q2 write-down on NewPage
(Helsinki, Finland, July 16, 2009) Top Nordic papermaker Stora Enso will take a charge of up to $575 million in the second quarter linked to its 19.9-percent stake in ailing North American coated paper maker NewPage.
Stora said in a statement late on Wednesday the final size of the write-down would depend on ongoing debt restructuring plans of NewPage, Stora's former North American unit which is now majority owned by Cerberus Capital Management.
Stora said in a statement that the writedown was linked to the debt restructuring, as well as the "poor prospects of an upturn in the market". (Source: Reuters)
Brazil's Aracruz sees no problem servicing debt
(Sao Paulo, Brazil, July 16, 20090 Brazilian pulp producer Aracruz Celulose (ARA.N)(ARCZ6.SA) expects favorable pulp prices and rising sales to help generate enough cash flow to service its short-term debt, a company executive said on Thursday.
"We believe that prices and performance will help us generate the cash to pay our debt," Joao Felipe Carsalade, Aracruz's sales director, told analysts on a conference call.
Carsalade also said he did not expect a drastic slowdown in orders from China this year, and the company would address its cash holdings position once Aracruz is incorporated by local rival VCP (VCPA4.SA), which has agreed to buy it. (Source: Reuters)
Rush Tracking acquires International Paper's patent portfolio for automated scanning
(Kansas City, KANS, U.S., July 19, 2009) Rush Tracking Systems, an industry-leading RFID business process consulting and systems integration company, announced the company's acquisition of a robust portfolio of Intellectual Property and patents from International Paper.
According to Rush Tracking Systems, the patent portfolio serves to further bolster VisiblEdge, Rush Tracking Systems' innovative RFID-enabled lift truck solution.
The acquired patents consist of IP designed to support the use of automated load scanning devices combined with a location identification system, as integrated into material handling devices for the purpose of tracking and managing physical inventory and other material handling assets.
Originally developed in the late 1990s by International Paper to track paper rolls in its manufacturing plants and finished goods warehouses, the IP portfolio was further enhanced in the early 2000s by ASURYS, International Paper's RFID internal venture, to capture additional concepts including event detection, load discrimination filtering, and other product categories.
Rush Tracking Systems will provide additional information on this IP during its July 21 webinar, to be presented with its strategic partner Sky-Trax: "Eliminate Operator Scanning and Optimize Warehouse Operations with Automatic ID and Indoor Positioning." (Source: press release)
SFK Pulp obtains temporary waiver for convenant breach
(Longueuil, Que., Canada, July 19, 2009) Immediately following news of an interest coverage ratio breach, SFK Pulp announced that it had obtained from its lenders a two-week temporary waiver while negotiating a permanent amendment to its credit agreement.
The Montreal Gazette reports that SKF wants a debt extension to help it over the current global softwood pulp market hump.
Longueuil-based SFK makes premium bleached Northern softwood kraft pulp at its 450,000 tonne/yr mill at St. Felicien, on Lac Saint Jean in Quebec's Saguenay region, and also premium recycled pulp at two smaller mills in the U.S.
It's not only the collapse in pulp prices, but also the proverbially high cost of Quebec's wood fibre, CEO Pierre Gabriel Cote told the Gazette. SFK asked the Quebec government for financial help and was turned down - - ostensibly because of the Eastern Canada forest products industry's high risk level as dramatized by the AbitibiBowater and Fraser Papers' filings for court protection from creditors, the paper reports.
Cote also revealed at SFK Pulp's annual meeting that the company must make a special U.S.$2.8 million provision in the quarter ending June 30 to cover payments owed by Fraser Papers.
Cote said SFK continues to negotiate with the banks (and indirectly the U.S. institutions) an amendment to the credit agreements. "We're confident a satisfactory agreement can be reached in the short term."
According to the Gazette report, Cote said the federal government's $1 billion "green" investment program for forest products came too late for the current crisis but could help later by spurring more innovation at the mill St. Felicien. (Source: Industry report, Canada)
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