Verso Paper reports 2Q net loss of $20.7 million

Aug 10, 2012. /Lesprom Network/. Verso Paper’s net sales for the 2Q 2012 decreased $33.5 million, or 8.4%, reflecting a 5.5% decrease in the average sales price for all of products combined with a 3.1% decline in total sales volume, which was driven by the shutdown of three paper machines late last year. Verso’s gross margin was 11.5% for the 2Q 2012 compared to 15.1% for the 2Q 2011, reflecting the higher average sales prices during 2011, as the company said in the press release received by Lesprom Network. Verso reported a net loss of $20.7 million in the 2Q 2012, or $0.39 per diluted share, which included $22.4 million of net benefits from special items, or $0.42 per diluted share, primarily due to debt refinancing. “Demand in the coated industry continued to be challenged during the 2Q 2012 which resulted in a delay in the announced price increases during the quarter. This was primarily a result of the drop-off in advertising spending and slowdowns in the commercial print area which are impacted by the sluggish GDP growth. However, our coated groundwood and coated freesheet volumes were relatively flat with last year’s levels and we did a good job of managing our pricing relative to overall market demand. Adjusted EBITDA was comparable to the 1Q of this year and slightly better if you exclude the over $5 million impact related to scheduled maintenance outages we took during the second quarter,” said David Paterson, President and CEO of Verso. “Our company was further challenged during the quarter by the fire and explosion at our Sartell Mill that resulted in the tragic loss of one of our employees and injuries to four others. As we announced last week, we have made the decision not to restart the Sartell Mill and will begin to evaluate options relative to the future of the site. “We anticipate that coated groundwood prices will gain positive momentum throughout the third quarter and coated freesheet prices to be stable as we move into the busier second half of the year. Overall, volumes will be similar to last year’s levels after giving consideration to the Sartell Mill closure. We expect operating costs to benefit from the continuation of our cost reduction initiatives and input prices are expected to remain fairly flat versus the 2Q. The U.S. coated groundwood market should be relatively in balance for the remainder of the year as a result of recent capacity reductions including the recently announced closure of our Sartell Mill”. Verso Paper Corp. produces coated papers, including coated groundwood and coated freesheet, and specialty paper products.