ABITIBI BACK IN BLACK
Things are looking up for Montreal-based AbitibiBowater Inc. The manufacturer of paper and wood products did better than analysts’ expectations, reporting a second quarter profit yesterday of US$61 million, or 63 cents per share.
The second quarter results were up considerably from the second quarter of last year, when the company reported a loss of almost $300 million. Adjusted for one-time items, the 2011 Q2 earnings were 71 cents per share, much higher than the 26 cents per share analysts had estimated.
The company is predicting continued growth in profit for the second half of the year. “Even though we continue to see inflationary pressures on the cost side and much uncertainty in the economy, we do expect to see improvement in our profitability in the second half of the year,” said Richard Garneau, AbitibiBowater’s president and chief executive officer.
AbitibiBowater’s closest competitor, Catalyst Paper Corp., reported a net loss for 2011 Q2 of $47.4 million. Abitibi, which came out of bankruptcy protection just eight months ago, has already made a number of cuts and says it will continue to reduce costs, while paying off more of its debt. They also plan to rebrand the company with a new corporate name.
The company has a 37 per cent hold of the North American newsprint market and was severely impacted by the drop in demand for newsprint caused by readers turning to the internet for news.
David Coles, president of the Communications, Energy and Paperworkers Union of Canada, said they had worked with AbitibiBowater to come up with efficiencies and savings, but he also said, “We paid a price for it. We lost members over it,” adding that it was better for the union to work with the company than watch it fail.
In total, the company reduced its workforce by about 7,000 employees, or 40 per cent of its workforce.
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