Pope & Talbot Records First Quarter Loss

By Michelle Cyr-Whiting

Pope & Talbot has reported a net loss of $18.6-million dollars for the first quarter of 2007, compared with a net loss of just $8.0-million for the same period last year. 

And the Company says it is currently engaged in discussions with its senior lenders, as it does not expect to end the 3rd and 4th quarters in compliance with the covenants of its secured credit agreement.  The Oregon-based company owns the Mackenzie Pulp Mill and Fort St. James Sawmill & Timber and reports it was in compliance as of the end of the first quarter, March 31st, 2007.

While a conference call to discuss the financial results is set for later this morning, a news release from the Company says until lumber market conditions improve, it will continue to be challenged by low lumber prices in its Wood Products Division and raw material costs and availability issues in the Pulp business.

Pulp revenues actually increased 3-percent from the first quarter of 2006 to $114.6-million dollars in the first three months of this year, but the tonnage shipped was down 16-percent.  Pope & Talbot says the reduction was primarily due to lower production for the quarter combined with transportation issues arising from the strike at CN Rail.

The Company’s Pulp business will be further adversely impacted in the second quarter by a planned $10-million dollar maintenance shutdown of the pulpmill in Nanaimo and a mechanical failure in the digester at the Mackenzie mill that resulted in a 14-day shutdown just last month.

"While the operational results for this quarter represent a significant setback, they underscore the necessity of focusing our near-term efforts on repositioning the company to weather the downturn," says Pope & Talbot President, Harold Stanton.  "With the support of our senior lenders, we should be able to endure the challenges of the current market environment."

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