MONTREAL – Resolute Forest Products is permanently shutting one of its U.S. newsprint machines even though demand is showing signs of stabilizing after years of dramatic decreases.
The Montreal-based pulp, paper and lumber producer said a machine at its mill in Augusta, Ga., isn’t competitive because of the high U.S. dollar. About 100 jobs will be affected by the closure.
The move, announced Thursday, will leave Resolute with three newsprint machines in the U.S., along with seven in Canada whose competitiveness is helped by the lower loonie.
Demand for newsprint has fallen by double digits annually in recent years as readers increasingly turn to digital media.
While long-term market conditions remain challenging, the pace of the decline in North American and global markets decelerated to five per cent in the first quarter, giving Resolute hope that demand will level out.
“We believe that we may be close to the floor that we were expecting three years ago (and) we’re certainly a lot more encouraged by the numbers that we are seeing,” CEO Richard Garneau said during a conference call on Resolute’s first-quarter results.
Resolute (TSX:RFP) recently announced price increases for newsprint in the United States amid reductions in industry capacity and improvements in demand.
“We have certainly a better outlook to indicate profitably could be better in the coming quarters,” Garneau told analysts.
The company also announced a loss of US$8 million, or nine cents per share, in the first quarter ended March 31 — an improvement from a loss of US$33 million or 35 cents per share in the first quarter of 2015. Sales fell to $877 million from $920 million, but the impact was offset by the positive impact of a weak Canadian dollar and lower expenses.
Excluding special items, Resolute had an $18-million loss in the first quarter or 20 cents per share — little-changed from a year earlier.
Resolute had been expected to lose 22 cents per share in adjusted earnings on US$902 million of revenues, according to analysts polled by Thomson Reuters.