AbitibiBowater posts deeper Q3 loss

AbitibiBowater 3-month TSX chart

AbitibiBowater Inc. said charges for plant closures, severance and asset impairment pushed it to a deeper loss in the third quarter.

The Montreal-based forest products company said it lost $302 million US, or $5.23 per diluted share, on sales of $1.7 billion.

For the same quarter of the previous year, the company had a net loss of $142 million, or $4.75 per diluted share, on sales of $815 million. That quarter's results were for Bowater Inc., as Bowater and Abitibi did not complete their merger on Oct. 29, 2007.

The company said its third-quarter loss for 2008 included:

An $18-million gain relating to foreign currency changes.A $3-million gain on asset sales.A $154-million charge related to closure costs, impairment and severance.A $65-million charge related to tax changes.

The $154-million closure costs include charges for the permanent closure of plants in Donnacona, Quebec and the Mackenzie, B.C., facilities, which were indefinitely idled during the first quarter of 2008.

Excluding the special items, AbitibiBowater's net loss for the quarter would have been $104 million, or $1.81 per diluted share.

Despite the third-quarter loss, AbitibiBowater's top executive made some positive comments about the firm's future.

"Although the market and overall economy remain very challenging, we continued to make progress during the third quarter, particularly with pricing for our paper grades," said president and CEO David Paterson.

"Given the significant decline of the Canadian dollar and rapidly declining input costs related to recycled fiber and energy, we expect a significant improvement in our financial results in the fourth quarter," he said in a release.

The company has 27 pulp and paper facilities and 34 wood products facilities in the United States, Canada, the United Kingdom and South Korea.

Plans to cut back on newsprint

Speaking during a conference call with investors and journalists Thursday, Paterson said the company will cut back on newsprint capacity in 2009, in response to an ongoing decline in demand.

"We will be making more definitive decisions in the future," Paterson said. "At this point, the cost of energy, recycled fibre and the Canadian dollar are too volatile to make those decisions on a more permanent basis."

Paterson added the company will "make the appropriate production decisions as it relates to our inventory levels" as it monitors its books through the next year.

Meanwhile, the announcement comes as AbitibiBowater seeks wage concessions from unionized workers at its only newsprint mill in Newfoundland and Labrador.

Members of the Communications, Energy and Paperworkers union were voting Thursday on what AbitibiBowater has called its final restructuring offer for its Grand Falls-Windsor mill. The company had given workers there until Friday to accept or reject the offer, which will likely involve scores of layoffs.