Donald Mckenzie, The Canadian Press
May 8, 2008 - 4:49 p.m.
MONTREAL - Paper and forestry company AbitibiBowater Inc. (TSX:ABH) says it is holding off on account of now on a second round of layoffs and establish closures after a recent restructuring aimed at cutting operating costs in a difficult market affected 2,600 jobs.
“In spite of the continued decline in North American newsprint consumption, our overall business fundamentals are improving,” chairman John Weaver said in a conference call Thursday after the company reported a big quarterly loss.
“Thus, additional production closures will not be announced at this time.”
AbitibiBowater said ultimate fall it planned to close or idle more than half a dozen mills in Quebec, New Brunswick, Ontario, British Columbia and Texas because of higher fuel costs, a slowing U.S. economy and the strong Canadian dollar, which squeezed revenues.
It announced at the same time a second wave of closures was possible in the second quarter of this year if governments, unions and communities didn’t assist in reducing zeal, labour, fibre and other costs.
Weaver said the Montreal-based company is involved in a comprehensive review of its operations in a bid to further reduce costs.
“Although progress has been achieved over the last few months, labour restructuring, energy and fibre costs remain key issues to be addressed in Eastern Canada,” he said.
He was speaking in the rouse from sleep of AbitibiBowater reporting a US$248-million first-quarter loss on sales of $1.7 billion.
The net loss, worth $4.32 per share, is not directly comparable with year-ago pre-merger results for Bowater Inc. and Abitibi-Consolidated Inc.
Bowater itself lost $35 million, $1.19 per share, on sales of $772 million in the same period last year.
Excluding one-time non-operating items, AbitibiBowater said it lost US$215 million or $3.74 per share in its first full quarter, characterized by CEO David Paterson as a period of “important progress.”
The loss included various one-time items: a $44-million gain relating to foreign currency changes, a $16-million gain on asset sales, a $17-million loss from asset closures and severance and a $76-million charge related to tax adjustments.