Bowater Incorporated has announced that it expects first quarter operating income to be $15 to $20 million below fourth quarter levels, excluding any gains from asset sales and other non-recurring items. In the first quarter, the company has experienced significant recycled fiber cost pressures, with the cost for old newsprint increasing by approximately 35% since December. In light of weak newsprint demand in North America, which has declined by 12% year-to-date compared to 2006, the company has curtailed production of newsprint and specialty papers during the quarter at its Gatineau, Quebec mill and selected other machines that are heavily dependent upon recycled fiber. In addition, lumber demand continues to be weak with low pricing through the first quarter.
“We are extremely disappointed by our anticipated first quarter financial performance,” said David J. Paterson, Chairman, President and Chief Executive Officer. “While North American newsprint demand and lumber pricing continues to be weak, we will remain strictly focused on containing controllable costs and matching our production to demand. That said, our pulp business is performing well with strong pricing across all grades.”
via Bowater
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