Resolute Forest Products Inc. announced that it has entered into a definitive asset purchase agreement with New-Indy Containerboard, LLC ("New-Indy") for the sale of its Catawba, South Carolina, paper and pulp mill, for a total purchase price of about $300 million, consisting of $260 million in cash, subject to customary closing adjustments, and the assumption of approximately $40 million of balance sheet liabilities, largely net pension benefit obligations. Catawba's operation includes a kraft mill and a pulp dryer to produce market pulp, a thermomechanical pulp mill as well as a lightweight coated paper machine. The facility currently employs 460 people. Under the terms of the asset purchase agreement, New-Indy will offer employment to Catawba employees effective upon closing of the transaction, which is expected at or around year-end. The sale is subject to certain closing conditions. Click read more below for additional detail.
A promising start of the year, supported by the profit protection programme
Q1/2019 (compared with Q1/2018)
- Sales increased 2.2% to EUR 2 635 (2 579) million, the highest first quarter since 2013 and the ninth consecutive quarter of growth.
- Operational EBIT decreased to EUR 324 (369) million which was in the upper end of our guidance range of EUR 260–350 million.
- The operational EBIT margin was 12.3% (14.3%), above 10% for the seventh consecutive quarter.
- Operating profit (IFRS) was EUR 313 (355) million.
- EPS decreased by 16.0% to EUR 0.29 (0.35) and EPS excl. IAC was EUR 0.30 (0.35).
- Cash flow from operations decreased slightly to EUR 223 (229) million. Cash flow after
investing activities amounted to EUR 94 (113) million.
- The net debt to operational EBITDA ratio increased to 1.7 (1.3), due to the adoption of IFRS 16 Leases (impact 0.3) and dividend payment.
- Operational ROCE was 14.0% (17.7%), above the strategic target of 13%.
Outlook for 2019
Stora Enso’s year 2019 is expected to be largely in line with 2018, provided that the current trading conditions do not significantly change. Demand growth is expected to continue for Stora Enso’s other businesses except for European Paper, for which demand is forecast to continue to decline in 2019. Group’s sales are expected to be higher and costs are forecast to increase in 2019 compared to 2018. Stora Enso will implement measures to mitigate these cost increases and the increased uncertainties with the profit protection programme.