Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the 1Q were $11.2 million, up from $7.2 million in the 4Q 2012. Adjusted EBITDA was not impacted by restructuring costs in either quarter.
"The Chinese economic rebound has driven pulp shipments and prices up," said Catalyst President and CEO Kevin J. Clarke. "But we had much tougher conditions on the paper side of the business, with a 10% drop in North American demand for newsprint and a 15% decrease in directory paper. Labour costs also tipped up due to unforeseen maintenance requirements. The fact that we improved EBITDA indicates how much better positioned we are after last year's restructuring."
Net income in the quarter was boosted by the completion of two asset sales. The court-approved sale of Snowflake mill assets and shares of the Apache Railway closed on January 30 for $13.5 million and other non-monetary consideration. Sale of Catalyst's 50% interest in Powell River Energy Inc. (PREI) completed on March 20 for $33 million. Catalyst continues to purchase electricity generated by PREI.
Benchmark prices and North American demand were down for all paper grades. Demand for lightweight coated declined by 5.3% while remaining flat for uncoated mechanical. Directory demand was down 15.3% and newsprint demand fell by 10.2%.
The Northern Bleached Softwood Kraft (NBSK) pulp markets continued to recover in the first quarter as improved demand from Western Europe and North America helped offset a slowdown in China. Global demand slipped by 1.6% from a strong 1Q 2012, but increased from fourth quarter shipments. Benchmark pulp prices continued to improve moderately during the quarter, although excess inventory build-up in China was observed.
Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp.