Bowater Reports Loss for Quarter

Bowater reported a net loss of $53.7 million on sales of $652.1 million. These results compare with a net income of $18.6 million on sales of $585.2 million in the second quarter of last year.

Before two charge items, the net loss for the second quarter of 2002 was $43.3 million. Bowater's results for the second quarter of 2001 do not include the impact of its acquisition of Alliance Forest Products Inc., which closed in September 2001.

Newsprint markets weakened further in the second quarter, and Bowater experienced a decline in the average price of newsprint of 3 percent, compared to the first quarter of the year.

Bowater cut newsprint production by 119,000 metric tons, of which 23,000 metric tons related to scheduled maintenance, and 27,000 metric tons related to a labor union dispute at the Mokpo, South Korea newsprint mill. Production at the mill resumed yesterday, July 29, following settlement of the strike.

The company noted that newsprint market fundamentals are improving, and it has announced plans to hike prices by $50 per metric tons Aug. 1. The company added that while trends in consumption are improving, it expects to curtail newsprint production by about 110,000 metric tons in the third quarter.

Pulp markets strengthened in the second quarter of 2002 due to increased consumption, low inventories and a weaker dollar. Bowater implemented two market pulp increases in the second quarter and implemented a third increase on July 1. Bowater's average selling price in the second quarter improved slightly compared to the first quarter. However, Bowater's pulp prices are more than $30 per metric ton higher than March levels. Bowater's market pulp production was curtailed by approximately 21,000 metric tons in the second quarter.

The selling price of Bowater's coated and specialty paper declined by 3 percent in the quarter.

In the second quarter, Bowater's cost per ton, net of downtime, was significantly lower than the first quarter. Bowater has achieved its previously increased $80 million Alliance synergy target six months ahead of schedule.