I was wondering how many retained their shares of Nexfor. Earnings were $0.23. Where do you see us(market,up, down or undecided) going from here?
newswire.ca
TORONTO, Feb. 4 /CNW/ - Nexfor today reported 1998 earnings of $48
million or $0.23 per common share compared to 1997 levels of $19 million or
$0.06 per share. Results in 1997 included a $19 million restructuring charge.
Operating earnings improved in 1998 to $155 million compared to $98 million a
year earlier.
Earnings for the fourth quarter of 1998 were $8 million or $0.04 per
common share. Results for the year earlier period were $7 million or $0.03 per
share.
Commenting on the year's results, Linn Macdonald, President and CEO of
Nexfor, said ''Record sales were achieved in 1998. Panels led the improvement
in profitability this year on the strength of OSB prices and the Company's
margin improvement initiatives continue to support year over year
profitability improvement.''
Operating earnings from building materials were $126 million for the year
and $36 million in the fourth quarter of 1998, improving upon the $94 million
and $14 million in the respective periods of 1997. The Company's oriented
strand board (OSB) operations continued to improve with overall production
reaching record levels. Beyond the substantial gains in supplying the new
housing market, OSB is now making major inroads into the repair and renovation
and DIY (Do-It-Yourself) end uses. The U.K. economy is showing signs of
slowdown with related pressure on medium density fibreboard (MDF) and
particleboard sales and prices. The European OSB market however, continues to
strengthen with growing demand and increasing prices. North American lumber
demand continues strong, but quota restrictions and oversupply in Canada have
depressed prices to the point where significant industry downtime was taken,
particularly in the high-cost B.C. region.
Operating earnings for papers in 1998 were $32 million compared to $8
million in 1997. Fourth quarter results of $2 million were considerably behind
the $13 million of the previous year. Coated groundwood had strong performance
in 1998, though late in the year competition from European imports and new
super-calendered capacity led to weakening prices. High consumer advertising
levels created strong demand for uncoated groundwood papers as supply was
restricted by a strike at a major industry producer. Uncoated freesheet prices
were under pressure all year from the effect of high inventories, and
increased capacity and imports. Text and cover demand eroded as customers
switched to significantly lower-priced commodity grades. Technical specialties
were caught in market share driven price competition or by customer pressure
to reduce costs. The Company's commodity newsprint mill contributed to
operating earnings until it was sold in December. The mill was sold for $160
million, with no earnings impact.
Pulp operations lost $1 million for the full year, $3 million in the
fourth quarter. In 1997, pulp lost $4 million for the year and $1 million in
the fourth quarter. Increased shipments and favorable exchange rates only
moderately improved returns. Significant improvements in paper and pulp
demand, coupled with meaningful reductions in industry capacity are required
for this sector to return to profitability.
Increased productivity and growth projects accounted for $153 million of
the Company's $222 million capital investment this year. The new MDF line at
Cowie, Scotland is on track for start-up in the second quarter of 1999; the
Joanna, South Carolina OSB mills is under construction for start-up in early
2000. The balance of the capital expenditures, $69 million, was invested in
existing operations to maintain production levels, and to enhance
environmental performance.
The public float of common stock has doubled following Noranda Inc.'s
distribution of shares in the Company on December 31, 1998. The share price
has come under pressure as investors rebalance their portfolios, though
increased liquidity is expected to support improved share price performance
over time. Management believes that the current price does not adequately
value the Company's earnings capability and has extended the share buyback to
December 1999, purchasing more than 3 million shares since the renewal in
early December 1998.
The Board of Directors today approved a quarterly dividend of $0.10 per
share for shareholders of record March 1, 1999, payable March 21, 1999.
Eligible shareholders may elect to participate in the Company's dividend
reinvestment program.
Nexfor is a major forest products company, supplying customers with a
range of specialty papers from its N.A. mills and OSB and panel products from
its U.S. and U.K. operations. The Company also produces softwood lumber and
market pulp. NF is a publicly traded company listed on Canada's major
exchanges.
<<
NEXFOR INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(unaudited) Three Months Ended
---------------------------------------
($millions, except Dec. 31 Sep. 26 Jun. 27 Mar. 28
per share information) 1998 1998 1998 1998
-------------------------------------------------------------------------
EARNINGS
Net sales $ 630 $ 644 $ 581 $ 571
-------------------------------------------------------------------------
Operating costs:
Cost of sales 525 507 470 485
Depreciation 43 42 41 41
Selling, general and
administrative 29 31 29 28
-------------------------------------------------------------------------
597 580 540 554
-------------------------------------------------------------------------
Operating earnings 33 64 41 17
Interest expense (17) (17) (17) (15)
Interest and other income 1 - 1 -
Income tax expense (9) (20) (12) (2)
-------------------------------------------------------------------------
Earnings $ 8 $ 27 $ 13 $ -
-------------------------------------------------------------------------
Earnings (loss) per common share $ 0.04 $ 0.15 $ 0.06 $ (0.02)
-------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of period $ 130 $ 122 $ 127 $ 146
Earnings 8 27 13 -
Preferred share dividends (3) (4) (3) (3)
Common share dividends (16) (15) (15) (16)
-------------------------------------------------------------------------
Balance, end of period $ 119 $ 130 $ 122 $ 127
-------------------------------------------------------------------------
NEXFOR INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(unaudited) Three Months Ended Year Ended
------------------- ------------------
($millions, except Dec. 31 Dec. 31 Dec. 31 Dec. 31
per share information) 1998 1997 1998 1997
-------------------------------------------------------------------------
EARNINGS
Net sales $ 630 $ 589 $ 2,426 $ 2,272
-------------------------------------------------------------------------
Operating costs:
Cost of sales 525 471 1,987 1,866
Depreciation 43 39 167 155
Selling, general and
administrative 29 27 117 122
-------------------------------------------------------------------------
597 537 2,271 2,143
-------------------------------------------------------------------------
33 52 155 129
Reorganization costs - (23) - (31)
-------------------------------------------------------------------------
Operating earnings 33 29 155 98
Interest expense (17) (14) (66) (58)
Interest and other income 1 1 2 7
Income tax expense (9) (9) (43) (28)
-------------------------------------------------------------------------
Earnings $ 8 $ 7 $ 48 $ 19
-------------------------------------------------------------------------
Earnings per common share $ 0.04 $ 0.03 $ 0.23 $ 0.06
-------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of period $ 130 $ 160 $ 146 $ 202
Earnings 8 7 48 19
Preferred share dividends (3) (3) (13) (10)
Common share dividends (16) (16) (62) (63)
Repurchase of common shares - (2) - (2)
-------------------------------------------------------------------------
Balance, end of period $ 119 $ 146 $ 119 $ 146
-------------------------------------------------------------------------
NEXFOR INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
Dec. 31 Dec. 31
($millions) 1998 1997
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash and short-term notes $ 181 $ 29
Accounts receivable 288 296
Inventory 332 364
-------------------------------------------------------------------------
801 689
Property, plant and equipment, net 1,945 1,962
Other assets 29 12
-------------------------------------------------------------------------
$ 2,775 $ 2,663
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank advances $ 14 $ 4
Accounts payable and accrued liabilities 422 399
Current portion of long-term debt 168 17
-------------------------------------------------------------------------
604 420
-------------------------------------------------------------------------
Long-term debt 744 828
Other liabilities 68 57
Deferred income taxes 77 38
Shareholders' equity 1,282 1,320
-------------------------------------------------------------------------
$ 2,775 $ 2,663
-------------------------------------------------------------------------
NEXFOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) Three Months Ended Year Ended
------------------- ------------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
($millions) 1998 1997 1998 1997
-------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Earnings $ 8 $ 7 $ 48 $ 19
Charges not affecting cash:
Depreciation 43 39 167 155
Deferred income taxes 13 3 44 5
Other (5) (12) 1 (10)
-------------------------------------------------------------------------
Cash provided by operations 59 37 260 169
Change in non-cash working
capital 87 (1) 41 (55)
-------------------------------------------------------------------------
146 36 301 114
-------------------------------------------------------------------------
INVESTMENT ACTIVITIES
Capital expenditures (99) (66) (222) (180)
Sale of property, plant and
equipment 160 - 163 -
Investments and other (21) 1 (46) (12)
-------------------------------------------------------------------------
40 (65) (105) (192)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Debt incurred (repaid), net 11 8 24 (21)
Dividends (19) (19) (75) (73)
Gain on interest rate swaps - - 13 -
Issue of common shares (6) (15) (6) (15)
-------------------------------------------------------------------------
(14) (26) (44) (109)
-------------------------------------------------------------------------
Increase (decrease) in cash and
short-term notes $ 172 $ (55) $ 152 $ (187)
-------------------------------------------------------------------------
NEXFOR INC.
SHIPMENTS
Three Months Ended Year Ended
------------------- ------------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
1998 1997 1998 1997
-------------------------------------------------------------------------
Lumber (MMfbm) 245 238 957 959
OSB (MMsf-1/16'') 2,011 1,909 7,740 7,276
Plywood (MMsf-1/16'') 233 234 862 883
MDF (MMsf-1/16'') 418 372 1,571 1,535
Particleboard (MMsf-1/16'') 591 632 2,394 2,484
Pulp (k tonnes) 131 117 505 471
Newsprint (k tonnes) 48 55 202 210
Groundwood paper (k tonnes) 46 49 180 204
Woodfree paper (k tonnes) 109 97 408 379
Paperboard (k tonnes) 12 9 48 38
-------------------------------------------------------------------------
NEXFOR INC.
CONSOLIDATED SEGMENTED INFORMATION
(unaudited) Three Months Ended Year Ended
------------------- ------------------
Dec. 31 Dec. 31 Dec. 31 Dec. 31
($millions) 1998 1997 1998 1997
-------------------------------------------------------------------------
Net sales
Building materials $ 296 $ 260 $ 1,105 $ 1,026
Papers 269 261 1,058 996
Pulp 72 76 295 284
Inter-segment and other (7) (8) (32) (34)
-------------------------------------------------------------------------
Total net sales $ 630 $ 589 $ 2,426 $ 2,272
-------------------------------------------------------------------------
Operating earnings (loss)
Building materials $ 36 $ 14 $ 126 $ 94
Papers 2 13 32 8
Pulp (3) 2 (1) (4)
Other (2) - (2) -
-------------------------------------------------------------------------
Total operating earnings $ 33 $ 29 $ 155 $ 98
-------------------------------------------------------------------------
>>
%SEDAR: 00003996EB
-30-
For further information: Ian Young, Senior Vice President & Chief
Financial Officer, (416) 216-3592; Patrick (Pat) Shaw, Vice President,
Investor Relations and Corporate Affairs, (416) 216-3575 |
