Abitibi Consolidated Inc. reported a fourth quarter loss of $108 million after recording a write down of $235 million after-tax, for the permanent closure of both its Sheldon, Texas and Port-Alfred, Quebec newsprint mills as an initial step of its in-depth operations review. This compares to a loss of $81 million in the fourth quarter of 2003.
The operating loss in the fourth quarter was $335 million compared with an operating loss of $211 million in the same quarter of 2003. The major difference year-over-year is higher mill-related closure costs, a stronger Canadian dollar and higher distribution costs. Offsetting these are higher prices for all of the company's paper and wood products, lower costs in both paper segments as well as a $57 million credit related to the revised U.S. lumber duty rates handed down in the fourth quarter.
For all of 2004, the company lost $36 million, compared with net earnings of $175 million for 2003. On an operating basis, the company reported a loss of $219 million in 2004, compared with a loss of $326 million in 2003.
"We are forging ahead in 2005 with a strategic plan designed to make Abitibi-Consolidated a more nimble competitor in the global marketplace," said John Weaver, president and CEO. "This plan will be implemented over the next several quarters and see investment at our strongest mills, while other facilities will be reviewed to maximize value. Improvements in cash flow as well as the cash generated from the execution of this plan are intended for debt reduction."
Measurable steps will be implemented to improve annualized EBITDA by $250 million by the end of 2006, including:
- Achieving $175 million in cost, productivity and sales mix improvements. The company's goal is to have newsprint mills only in the first or second cost quartiles, and to reduce North American newsprint cash costs by $25 per metric ton.
- As part of the plan, the Company will focus its review on its higher cost mills in Newfoundland (Grand Falls and Stephenville) as well as on two Ontario mills (Kenora and Fort William).
- The remaining $75 million in profit improvements to come from other initiatives, among which will be:
- The next AO/EO conversion; and the re-launch of the Lufkin, Texas mill into a new product or the sale of the mill