Repap appoints chairman; Repap New Brunswick year-end results
Repap Enterprises Inc
RPP
Shares issued 743,327,707
1999-01-27 close $0.07
Thursday Jan 28 1999
Mr. Stephen Larson reports
Steven Berg, president of Bishopsgate Financial Corp., will replace Mr. William
Anderson as chairman of the board.
Ms. Michelle Cormier reports
For the year ended Dec. 31, 1998 revenues totalled $683.6-million, up 12.1 per
cent over revenues of $609.9-million in 1997, reflecting the benefits of increased
shipments in all business segments and a weaker Canadian dollar, offset partially
by lower prices. The company's net loss was $57.6-million compared to
$89.5-million in 1997. Results for 1997 were negatively impacted by a onetime
$23.0-million writeoff of an investment in a previously affiliated company. Repap
New Brunswick's operating profit before depreciation and amortization and
before non-cash hedged foreign exchange adjustments totalled $180.5-million for
1998 an increase of $81.3-million over the 1997 EBITDA of $99.2-million.
In the fourth quarter of 1998, revenues were $178.8-million, up 8.2 per cent over
revenues of $165.3-million in the fourth quarter of 1997 and up 3.5 per cent over
revenues of $172.7-million in the third quarter or 1998. The improvement in
revenues over the third quarter resulted mainly from higher shipments of pulp and
coated paper, offset partially by lower prices.
Repap New Brunswick had a net loss of $3.2-million for the fourth quarter
compared to a loss of $5.4-million in the fourth quarter of 1997 and a loss of
$8.5-million in the third quarter of 1998. EBITDA for the fourth quarter of 1998
at $45.0-million equaled the third quarter despite lower prices, and was 21 per
cent higher than the $37.1-million reported in the fourth quarter of 1997. Higher
shipments of coated paper and lower costs were the positive factors influencing
earnings.
Repap New Brunswick is an integrated coated groundwood paper facility with an
annual capacity of 492,000 tons of coated paper, 235,000 metric tons of northern
bleached softwood kraft pulp, 123,000 metric tons of groundwood pulp and 58
million foot board measure of lumber. It is on the Miramichi River in New
Brunswick.
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended Dec. 31
(thousands of dollars)
1998 1997
Revenues $ 165,343 $ 178,823
Hedged foreign
exchange
adjustment (1,660) (1,660)
---------- ----------
Net revenues 163,683 177,163
---------- ----------
Net sales 143,817 156,722
Cost of sales
excluding
depreciation and
amortization 104,017 107,455
Selling,
administrative and
research expenses 4,345 5,977
Depreciation and
amortization 12,782 17,200
---------- ----------
Operating profit 22,673 26,090
Interest expense 26,651 27,427
Miscellaneous expense 689 1,442
Unusual items 110 -
---------- ----------
Loss before the
undernoted (4,667) (2,779)
Provision for
income taxes 743 388
---------- ----------
Loss $ (5,410) $ (3,167)
========== ==========
CONSOLIDATED STATEMENT OF OPERATIONS
Year ended Dec. 31
(thousands of dollars)
1998 1997
Revenues $ 609,908 $ 683,637
Hedged foreign
exchange
adjustment (5,698) (5,706)
---------- ----------
Net revenues 604,210 677,931
---------- ----------
Net sales 529,511 602,455
Cost of sales
excluding
depreciation and
amortization 416,239 403,122
Selling, admin and
research expenses 19,784 24,498
Depreciation
and amortization 53,304 67,310
---------- ----------
Operating profit 40,184 107,525
Interest expense 103,534 107,968
Miscellaneous
expense 1,202 8,672
Unusual items 22,999 46,382
---------- ----------
Loss before the
undernoted (87,551) (55,497)
Provision for
income taxes 1,948 2,076
---------- ----------
Loss $ (89,499) $ (57,573)
========== ==========
Mr. Larson also reports
For the fourth quarter ended Dec. 31, 1998 Repap had a loss for the quarter of
$7.4-million (one cent per share) compared with a net income of $49.4-million
(seven cents per share) in the fourth quarter of 1997. The fourth quarter of 1997
included a net gain from discontinued operations of $57.4-million, which reflected
mainly the elimination of certain liabilities related to Alcell. Excluding discontinued
operations, Repap's loss from continuing operations was $7.3-million for the
fourth quarter of 1998 compared to $8-million in the fourth quarter of 1997.
Revenues for the fourth quarter of 1998 were $178.8-million, up 8.2 per cent
from revenues of $165.3-million in the fourth quarter of 1997 and up 3.5 per cent
from revenues of $172.7-million in the third quarter of 1998. The increase in
revenues over the fourth quarter of 1997 was generated mainly from increased
shipments of pulp and coated paper, offset in part by lower pricing in all product
lines.
Repap's operating profit, excluding non-cash hedged foreign exchange
adjustments, was a solid $43.8-million for the fourth quarter of 1998 compared to
an EBITDA of $36.0-million in the fourth quarter of 1997 and $43.3-million in the
third quarter of 1998, reflecting higher shipments and the benefits of increased
productivity.
Revenues for the full year 1998 were $683.6-million up 12.1 per cent from the
$609.9-million reported for the year 1997, reflecting higher shipments and prices
for coated paper and a weaker Canadian dollar, offset in part by lower shipments
and prices for kraft pulp. EBITDA for the year 1998 was $177.1-million, up 113
per cent or $93.8-million compared to $83.3-million for the same period in 1997.
Repap had a loss of $51.4-million (seven cents per share) in 1998 compared to a
loss of $63.5-million (17 cents per share) last year. Excluding unusual charges and
discontinued operations, the loss for 1998 was $22.0-million compared to a loss
of $137.3-million in 1997.
Nineteen ninety-eight has proven to be a successful turnaround year for Repap in
many respects, with new production and shipment records being set. The
consistency of performance quarter-over-quarter has been translated through
EBITDA. EBITDA for the year 1998 of $177.1-million was second only to the
peak year EBITDA of $253-million earned in 1995, when coated paper prices
were on average $205 (U.S.) per ton higher than 1998. Furthermore, it generated
an EBITDA margin of 28.7 per cent which the company believes to be one of the
highest in either the North American or European forest products industry. The
successes of 1998 are attributable to a number of objectives accomplished:
The smooth integration of the marketing, sales and customer order functions in
early 1998 resulted in a cost effective, knowledgeable and experienced team
which moved 460,000 tons of coated paper, increasing shipments by 4 per cent
over 1997 in a market environment where shipments by the U.S. industry
decreased approximately 2 per cent. Repap's inventories of coated paper have
been reduced to an all time low;
The continuous improvement in coated paper production in 1998 reached a new
record of 1,271 tons per day, up 7 per cent over the 1997 production of 1,191
tons per day. Cash costs per ton are down significantly, with Repap identified as
the lowest cash cost producer of lightweight coated groundwood paper in North
America in three major basis weights according to a recent independent cost
competitive analysis;
New performance records were also established in safety and quality;
The effective transfer of the executive office to Connecticut and the streamlining
thereof materially reduced overhead costs;
The timely sale of the Atholville magnefite pulp mill reduced debt and other
obligations by approximately $50-million;
The successful completion of approximately $365-million (U.S.) of financing
activities resulted in the avoidance of further dilution to shareholders, the
elimination of mandatory principal repayments in 1998 and 1999 totalling
$37-million (U.S.) and the extension of maturities on certain long-term debt
instruments.
CONSOLIDATED STATEMENT OF INCOME
Three months ended Dec. 31
(millions of dollars)
1998 1997
Revenues $ 165.3 $ 178.8
Hedged foreign
exchange
adjustment 1.6 1.7
-------- --------
Net revenues 163.7 177.1
-------- --------
Net sales 147.5 159.1
Cost of sales 104.0 107.4
Selling, admin
and research 9.1 9.6
-------- --------
Operating margin 34.4 42.1
Depreciation and
amortization 13.1 18.1
-------- --------
Operating profit
(loss) 21.3 24.0
Interest expense 26.6 28.9
Other expenses
(income) 0.5 2.4
-------- --------
Pretax loss (5.8) (7.3)
Provision for
income taxes 0.7 0.0
-------- --------
Loss from
continuing
operations (6.5) (7.3)
Unusual item - -
Provision for accretion
of paid-in capital 1.5 -
Net loss from
continuing
operations (8.0) (7.3)
Discontinued
operations 57.4 (0.1)
-------- --------
Net income (loss) $ 49.4 $ (7.4)
======== ========
Earnings (loss) per
share 7 cents (1 cent)
CONSOLIDATED STATEMENT OF INCOME
Year ended Dec. 31
(millions of dollars)
1998 1997
Revenues $ 609.9 $ 683.6
Hedged foreign
exchange
adjustment 30.1 5.7
-------- --------
Net revenues 579.8 677.9
-------- --------
Net sales 520.4 611.7
Cost of sales 416.2 403.1
Selling, admin
and research 51.0 37.2
-------- --------
Operating margin 53.2 171.4
Depreciation and
amortization 57.2 68.8
-------- --------
Operating profit
(loss) (4.0) 102.6
Interest expense 117.9 111.5
Other expenses (income) (1.0) 8.1
-------- --------
Pretax loss (120.9) (17.0)
Provision for
income taxes 2.0 2.1
-------- --------
Loss from
continuing
operations (122.9) (19.1)
Unusual item - 46.4
Provision for accretion
of paid-in capital 14.4 2.9
Net loss from
continuing
operations (137.3) (68.4)
Discontinued
operations 73.8 17.0
-------- --------
Net income (loss) $ (63.5) $ (51.4)
======== ========
Earnings (loss)
per share (17 cents) (7 cents)
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