Weyerhaeuser

Weyerhaeuser Co. reported first quarter 2004 net earnings of $121 million on net sales of $5 billion. This compares with a loss of $54 million on net sales of $4.6 billion for the first quarter of 2003.

"In addition to the continued strength of single-family housing starts and the wood products market, we are seeing improvement in our pulp, paper and containerboard markets," said Steven R. Rogel, chairman, president and CEO. "The improved efficiencies of our operations are becoming more apparent due to the combination of strong market conditions, synergies from the Willamette acquisition and asset rationalization. Many of our operations are running at record production rates and we're maintaining strong order files. However, we are experiencing transportation disruptions in truck, rail and ocean service that are continuing into the second quarter and are making it increasingly challenging to meet customer needs."

In the pulp and paper sector, Weyerhaeuser reported that during the first quarter paper grade pulp prices continued to increase.

Paper shipments increased significantly from fourth quarter levels primarily due to a general improvement in U.S. economic activity and lower paper imports. Market downtime was eliminated in the first quarter compared with 96,000 tons in the fourth quarter. These factors helped improve operating results during the first quarter.

The company expects the segment to return to profitability in the second quarter. Prices for pulp and paper are expected to increase in the second quarter. Shipments are expected to remain stable for both of these product lines.

For containerboard, higher costs for old corrugated containers and lower prices for boxes resulted in lower first quarter earnings.

First quarter market downtime was 32,000 tons compared with 71,000 tons in the fourth quarter. Box shipments increased both seasonally and compared with the first quarter last year.

Improving economic conditions are expected to result in greater demand for boxes in the second quarter. As a result, the company expects higher second quarter earnings due primarily to increasing prices and shipments, partially offset by higher OCC costs.

Abitibi-Consolidated

Abitibi Consolidated Inc. reported a first quarter loss of $31 million compared to net earnings of $180 million recorded in the first quarter of 2003 and a loss of $81 million in the fourth quarter of 2003.

The operating loss from continuing operations in the first quarter (which include $7 million of closure costs) was $17 million compared with $36 million in the same quarter of 2003.

"Prices for all of our products continue to improve and, as a result, our EBITDA before closure costs was up more than 40 percent from the fourth quarter of 2003," said John Weaver, president and CEO. "The recent newsprint price increase is evidence that the supply and demand picture in North America has found balance. More recently, market demand is improving and anecdotal evidence in the publishing community as well as our own order book suggests that we will continue to be sold out in Q2."

Apart from what has already been indefinitely idled, the company operated its mills at full capacity in the first quarter, taking no market-related downtime in North America. The company's newsprint inventories were flat at the end of the quarter compared with year-end levels.

PanAsia, a 50-50 joint-venture, recorded net earnings of $10 million and EBITDA of $31 million in the first quarter of 2004, on sales of US$229 million. Construction at PanAsia's new Hebei, China newsprint mill, got underway during the quarter as well.

Sales were $1.355 billion in the first quarter of 2004, compared to $1.352 billion in the first quarter of 2003. The operating loss from continuing operations was $17 million in the first quarter of 2004, compared to $36 million for the first quarter of 2003.

In the first quarter of 2004, newsprint and value-added groundwood papers operating results were negatively impacted by additional closure costs of $3 million and $4 million, respectively.

According to the Pulp and Paper Products Council, consumption by U.S. daily newspapers was down 0.8 percent in the first quarter of 2004, compared to the same period in 2003.

North American overall demand for newsprint increased by 1.1 percent in the first quarter of 2004, compared to the same period in 2003, due to increased inventory levels for all users.

Total U.S. consumption was down by 2.6 percent in the first quarter of 2004, compared to the first quarter of 2003, as other users, namely commercial printers, continued to favor other grades of paper as pricing differences between newsprint and value-added grades continued to diminish.

According to the PPPC, at the end of the first quarter of 2004, total producer and customer newsprint inventories were higher by 135,000 metric tons, or 9.6 percent, compared to the previous quarter and higher by 28,000 metric tons, or 1.9 percent, compared to the end of the first quarter of 2003. U.S. daily newspaper inventories increased from 38 days of supply at the end of the first quarter of 2003 to 43 days of supply at the end of the first quarter of 2004. At the end of the first quarter of 2004, the Company's inventories destined for both international markets and North American customers remained at low levels compared to the end of 2003.

The company's newsprint shipments in the first quarter of 2004 were 1,140,000 metric tons compared to 1,116,000 metric tons in the first quarter of 2003. Except for the previously announced indefinitely idled mills and holiday season shutdowns, the company did not take any other market-related downtime in the first quarter of 2004. Despite higher U.S. dollar selling prices, Canadian dollar realization for newsprint in the first quarter of 2004 was $12 per tonne lower than the corresponding period of 2003.

During the first quarter, the company implemented $50 per metric ton price increases in the U.S. and in key international markets including Latin America, Asia and the Middle East. Such price increases were the main element in the Company's average Canadian dollar realization which increased by $22 per metric ton compared to the fourth quarter of 2003.

Smurfit-Stone

Smurfit-Stone Container Corp. reported a net loss available to common stockholders of $66 million for the first quarter. These results compare with a net loss of $33 million for the first quarter of 2003.

Sales for the period increased 3.5 percent to $1.942 billion, from $1.877 billion in the first quarter of 2003.

Commenting on the results, Patrick J. Moore, chairman, president and CEO, said, "As we announced in March, continued price and cost pressures negatively affected the company's first quarter results. However, during the quarter, we saw a continuation of sustained volume growth in the corrugated container business. Price increases have taken hold, while modestly favorable trends emerged in our consumer packaging business as well."

The company's U.S. corrugated shipments rose 3.6 percent on a per day basis, compared to the year ago quarter. However, a competitive environment resulted in lower average container prices. In addition, the company experienced operational inefficiencies as it increased production, responding to improved demand, while reducing headcount as part of the ongoing cost reduction initiative.

The company's containerboard mill operating rate was 91.5 percent in the first quarter. This represents an improvement over both the fourth quarter operating rate of 88.5 percent and the year ago rate of 90.1 percent. Reflecting healthy demand, the company began implementing containerboard price increases.

Folding carton shipments rose almost one percent on a sequential basis. Boxboard production improved 3.7 percent. While multiwall bag shipments were down compared to the fourth quarter, prices improved 4.1 percent due to improved product mix.

The company contended with energy and fiber cost pressures in the period. During the first quarter, escalated energy prices resulted in a $15 million increase in cost, compared to the fourth quarter 2003, though they were $3 million lower than first quarter 2003. While energy prices will likely remain high, energy consumption should moderate in the second quarter, resulting in lower costs. Due to greater demand and higher mill operating rates, recovered fiber costs increased $8 million compared to the first quarter 2003 and $6 million sequentially. Virgin fiber costs were $11 million higher in the first quarter than the same period last year, though sequentially costs were $3 million lower. Employee benefit costs were up $6 million over year ago levels.