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Catalyst cuts losses, but revenue sinks

Pulp and paper producer Catalyst Paper says it narrowed its second-quarter loss to $11.7 million, or three cents per share. That's compared to a loss of $47.4 million, or 13 cents per share, a year ago. Revenue was $312.8 million, compared to $340.

Pulp and paper producer Catalyst Paper says it narrowed its second-quarter loss to $11.7 million, or three cents per share.

That's compared to a loss of $47.4 million, or 13 cents per share, a year ago.

Revenue was $312.8 million, compared to $340.3 million last year.

Catalyst Paper said its operating earnings were down in the quarter because of reduced sales volumes for newsprint and pulp, as well as lower transaction prices for paper grades. Manufacturing costs increased on higher electricity prices and maintenance spending.

However, those negatives were offset by a lower Canadian dollar and labour costs from new collective agreements that went into effect at its Canadian mills in May. Annual savings from the new agreements are expected to be in the range of $18 million and $20 million.

Reductions in municipal taxes at its B.C. mills also helped and are expected to save the company $6.1 million annually.

Catalyst operates mills in Crofton, Port Alberni and Powell River.

The Richmond-based company filed for creditor protection on Jan. 31, after some workers and bondholders rejected its plan for restructuring debt and cutting costs.

"We focused relentlessly on satisfying the requirements of the reorganization process and it's gratifying to have gained creditor approval of our second amended plan of arrangement," said president and CEO Kevin Clarke.

"We are now poised for an orderly exit in the third quarter. While market conditions are challenging, the benefit of reduced operating costs and the 60 per cent reduction in debt puts us on much better competi-tive footing as our industry continues to reinvent for the future."

Catalyst Paper announced the permanent closure of its Snowflake recycle mill in northeastern Arizona and its subsidiary, the Apache Railway Company. The move cuts 308 workers after production shuts down on Sept. 30.

The company cited flagging demand for newsprint, price volatility and higher freight costs as reasons for the closure.

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