Aug 15, 2008. /Lesprom.com/. Forest products firm AbitibiBowater Inc. is prepared to cut production and take a tough line on labour negotiations next year as the world's largest newspaper producer attempts to further reduce costs amid continuing quarterly losses, The Canadian Press reported. "Newsprint consumption is down in 2008 more than we anticipated and costs are higher than we anticipated," CEO Dave Paterson said during a conference call. For the quarter ended June 30, AbitibiBowater lost $251 million, up from a year-ago loss of $248 million. AbitibiBowater suggested it will take a tough stand at next year's contract negotiations after workers refused last year to agree to wage and pension concessions the company said were desperately needed to lower operating costs. During a first wave of cuts last year, Abitibi closed or idled mills in Quebec, New Brunswick, Ontario, British Columbia and Texas, affecting 2,600 jobs. The Montreal-based company, formed by the merger of forestry giants Abitibi-Consolidated Inc. and Bowater Inc. last year, said its quarterly loss amounted to $4.36 per diluted share, compared with a net loss of $4.32 per share in the year-ago period. Sales for the combined company were $1.7 billion in the quarter. Reporting for Bowater alone in 2007, as per U.S. accounting regulations, quarterly sales were $798 million. Excluding special items, the combined company said its loss would have come to $150 million, or $2.60 per diluted share. That was slightly above analyst expectations. A survey of analysts by Thomson Financial anticipated losses of $2.37 per share. Although the company said the results were "unacceptable," it posted a significant improvement in its operating performance in the quarter as the realization of synergies was coupled with higher prices. Abitibi has achieved $270 million in annualized synergies and expects to achieve its goal of $350 million by the end of 2009. The company is increasingly attempting to export its newsprint, especially to the Middle East, South America and Asia, despite facing shipping challenges and higher ocean freight costs. Exports can fetch significantly higher prices amid flat demand. U.S. consumption of newspaper decreased 10.4% during the quarter, while production fell by nine per cent. Demand for coated mechanical papers decreased by 4% in North America as a sluggish American economy caused magazine publishers to reduce page counts in light of reduced advertising. Meanwhile, uncoated paper demand increased 6.2% and pulp were up 1.4% in the quarter. Wood sales remain weak as U.S. housing starts fell by 27% to 1.1 million in June. AbtibiBowater operates the newsprint mill in Grand Falls-Windsor.