REPAP ENTERPRISES REPORTS FOURTH QUARTER 1999 RESULTS
STAMFORD, CT., Feb. 1 /CNW-PRN/ - Repap Enterprises Inc. today reported
results for the fourth quarter and full year 1999.
Revenues for the fourth quarter of 1999 were $180.1 million, essentially
flat with the fourth quarter of 1998 and up 12.3% or $19.7 million from third
quarter 1999 revenues of $160.4 million. Shipments of coated paper were up 7%
from last year's fourth quarter and 5% from the third quarter of 1999,
reflecting the impact of a significant improvement in market demand. Prices,
although still well below fourth quarter 1998 levels, have increased over the
third quarter of 1999, contributing to an improving revenue stream. Pulp
shipments and pricing also improved during the fourth quarter.
Repap's EBITDA (operating profit before depreciation and amortization and
excluding non-cash currency hedging) was $36.4 million for the fourth quarter
of 1999 compared to $43.8 million for the fourth quarter of 1998 and $33.1
million in the third quarter of 1999.
The decrease in EBITDA from the corresponding period of 1998 reflects the
impact of lower pricing for coated paper and a significantly stronger Canadian
dollar, offset partially by the benefit of a strong operating performance and
improved prices for kraft pulp. Prices for coated paper, which bottomed in the
second quarter of 1999, began to improve in the third quarter with further
increases in the fourth quarter.
Repap's operating subsidiary, Repap New Brunswick Inc. reported EBITDA
for the fourth quarter of 1999 of $34.5 million compared to $45.0 million in
the corresponding quarter of 1998 and $32.3 million in the third quarter of
this year. The fourth quarter of 1999 included a $2.5 million one-time
negative adjustment to net sales, while the fourth quarter of 1998 included
one-time positive adjustments of $3.5 million. In addition, the stronger
Canadian dollar negatively impacted 1999 fourth quarter EBITDA by
approximately $5 million when compared to the fourth quarter of 1998.
Repap recorded a loss for the fourth quarter of $10.1 million ($0.01 per
share) compared to a loss of $7.4 million ($0.01 per share) in the fourth
quarter of 1998 and a loss of $13.8 million ($0.02 per share) in the third
quarter of 1999.
For the full year 1999, Repap reported revenues of $645.6 million
compared to $683.6 million in 1998 while EBITDA was $136.2 million compared to
$177.1 million in 1998.
Mr. Stephen Larson, President and CEO, had the following comments, ``The
reduction in revenues and EBITDA of approximately $41 million year over year
can be directly attributed to the weak pricing environment experienced in the
first half of 1999 which overshadowed a very strong operating performance.
Market volatility was prevalent through most of the year with weak
paper markets as coated paper pricing fell to some of the lowest levels of the
decade. Pulp markets which have been in a down cycle for the past few years
finally hit bottom in the summer. In addition to weathering these markets,
work stoppages by certain of the Company's unionized employees also impacted
the Company, reducing EBITDA by $4.8 million for the year.
Despite the instability created by these events, many positive results
were accomplished:
- Tremendous support from the financial community enabled management to
successfully complete a US$100 million high yield secured note
offering maturing in 2004. Proceeds were used to repay banks in full
and to increase the operating company's liquidity by approximately $50
million.
- The short labor strikes resulted in six-year agreements being signed,
re-establishing workforce stability.
- Operational focus was maintained with the mill setting many new
production records with the month of November being the latest record
as paper production averaged 1408 tons per day. For the full year,
even with lost production from the strike, the mill produced more than
ever before.
- Costs were down in all areas and the cost reduction program reached
25.6 million in savings for the year, almost tripling the $9 million
target set at the beginning of the year. Since the inception of this
program in 1996, in excess of $65 million in savings have been
achieved.
- Mill operating performance was driven by excellent customer support
and a strong marketing team which was able to sell all coated paper
production in an environment where many producers were taking
extensive downtime. Shipments were at an all-time record of 473,000
tons.
- A complete replacement and expansion of the sales/order entry and
inventory system was successfully executed with tremendous time
commitment and coordination among sales, customer service, corporate
and mill personnel. The $6 million project was also critical to our
Y2K compliance program.
- We reinvested $30.8 million in the New Brunswick mill maintaining
operational integrity and adding improved coating capability on the A2
paper machine.'
Mr. Larson concluded by stating, ``As we move into 2000, the prospects
for strengthening market conditions in lightweight coated paper, which
represents 85% of our revenue, are quite good. Coated paper demand continues
to grow, inventories are low, supply is balanced and operating rates are high.
Supported by strong international pulp markets, a long-awaited recovery is
underway. This anticipated market environment combined with the extraordinary
results of our employees over the past three years that drove costs down and
productivity up should result in improved earnings. Our first priority will be
to use free cash flow to reduce debt and begin the process of establishing a
more prudent capital structure to the benefit of all stakeholders.' |
