Resolute’s paper mill improves its financial results for the first quarter of 2019 compared to the same period last year, despite a sharp rise in fiber prices, a drop in pulp prices and a drop in shipments in the first quarter newsprint sector.
As a result, the paper continues to post some very attractive financial results for all of its 2018 operations, despite an endless trade dispute with the United States in the softwood lumber sector. US $ million deposited with the US government). Resolute therefore reported net income of $ 42 million for the first three months of 2019, while at the end of the same period, in 2018, it posted net income of $ 10 million.
The chief boss of Resolute, Yves Laflamme, is obviously satisfied with the results published Tuesday. He points out that the company has been able to take advantage of a significant improvement in productivity and thereby counteract more difficult market elements, as is the case with newsprint and lumber, which literally dropped in the third quarter of 2018.
Fiber prices are subject to upward pressure. Quebec’s new forest regime has had a major impact on the price of raw material.
“It can be argued that there is currently a surplus of capacity in the newsprint market which represents a paper machine (more or less 200,000 tonnes). We have taken measures to balance supply and demand with production slowdowns, but these are temporary measures, “explained Yves Laflamme, while remaining very cautious about possible paper machine closures.
This surplus situation comes as the industry has eliminated from the market one million metric tons of production capacity in 2017. The President of Resolute reminds us that the region has been spared by the closures and the company has even relaunched the production on a machine at the Alma factory.
Despite the interesting figures, Quebec’s pulp and paper industry will soon be confronted with a problem of scarcity of the resource. This is mainly the supply of chips that will become more difficult in a few months. This problem stems from three factors, according to Mr. Laflamme. Two industrial projects (Chantier Chibougamau and Barrette-Chapais) will require no less than 600,000 to 700,000 metric tons of chips per year currently being disposed of at pulp and paper mills in Quebec.
“This is a situation that will occur in the short term if we add the increase in production in Saint-Felicien for 60,000 tons and the revival of operations for a machine in Alma. When we modernize sawmills, we also reduce chip production with more efficient equipment, “adds Yves Laflamme.
Solutions to this situation that could have an impact on the production of paper are not numerous. Yves Laflamme believes that it would be possible to add volumes of wood for sawmills that are currently working on a single shift, as is the case in the Saint-Thomas-Didyme and Saint-Félicien mills.
The availability of fiber is another issue for the industry. Paper mills still do not know what the government wants in both Quebec and Ontario for the whole issue of protection of woodland caribou habitat.
Despite these problems, Resolute can rely on cash of nearly $ 600 million in addition to US $ 117 million on deposit in the United States. Yves Laflamme reiterates the commitments of his predecessor during the revival of the company after the financial restructuring on the importance of supporting pension plans and effectively operating the factories.
“Our liquidity allows us to complete our operations and fund our pension plans,” concluded the Chairman.