Resolute Forest Products Inc. has reported net income for the quarter ended June 30, 2020, of $6 million Canadian dollars, or 7 cents per diluted share, compared to net income of $25 million, or 27 cents per diluted share, in the same period in 2019.
Montreal-based Resolute Forest Products bought Conifex Timber’s El Dorado sawmill last year, intending to build on Conifex’s $55 million investment in the facility.
Thursday’s company statement said the lumber market lately has been a bright spot against what were pessimistic expectations in April, driven by the strength of the repair and remodeling market and stronger housing starts.
“The integration of the U.S. lumber assets is progressing well, as they have also benefitted from an above-seasonal surge in demand for decking. As lumber demand remains promising, we are pursuing our plan to bring the El Dorado facility on-line in early 2021,” the statement said.
Sales were $612 million in the quarter, a decrease of $143 million from the year-ago period. Excluding special items, the company reported a net loss of $22 million, or 25 cents per share, compared to net income of $11 million, or $0.12 per diluted share, in the second quarter of 2019.
"The Covid-19 pandemic and ensuing economic slowdown have brought with them unprecedented challenges and business uncertainty," said Yves Laflamme, president and chief executive officer. "Despite the challenging business environment, except for the low-interest term loan used to finance the acquisition of the U.S. sawmills, we repaid all of the borrowings we drew in Q1, and our liquidity improved to nearly $400 million.
“On the business side, we've seen stronger pulp pricing and higher lumber shipments in the second quarter, offset by a weaker paper segment, which reflects lower demand levels since the onset of the pandemic and our resulting capacity adjustments. We're pleased with the integration of our recently-acquired U.S. sawmills and we're excited about their prospects."
Non-GAAP financial measures, such as adjustments for special items and adjusted
The company reported operating income of $6 million in the second quarter. The $14 million improvement over the previous quarter reflects the favorable impact of the weaker Canadian dollar ($11 million), stronger pulp pricing ($9 million) and higher lumber shipments ($9 million), offset by lower paper and pulp shipments ($18 million) and softer quarter-over-quarter lumber pricing ($5 million), despite a late quarter increase in pricing.