Wausau-Mosinee Paper Corp Announces Q1 Reduced Earnings
Press release from the issuing company
MOSINEE, Wis.--April 21, 2003--Wausau-Mosinee Paper Corporation today announced first-quarter earnings of $1.3 million, or $.03 per share, compared with $3.4 million, or $.07 per share, during the first quarter of 2002. Reduced earnings were primarily caused by sharp increases in energy, market pulp, and wastepaper prices. Net sales increased 6 percent to $239.8 million, from $225.9 million last year, as shipments were up in all three business segments.
"Though far from satisfied with our first-quarter earnings, we are pleased that the market share gains and bottom-line benefits achieved through our internal initiatives were able to offset much of the higher energy and fiber costs during the quarter," said Thomas J. Howatt, president and chief executive officer. "Revenues from products developed within the past three years accounted for 36 percent of first-quarter net sales, exceeding our goal of 25 percent; improvement in operating efficiencies exceeded 1.5 percent; and cost reduction efforts continued to pay meaningful benefits. Unfortunately, natural gas and fuel oil costs increased a combined $6.6 million compared with last year, and market pulp and wastepaper costs rose $4.8 million. Together, these increases reduced net earnings by $.14 per share at a time when weak market conditions have virtually eliminated the ability to recover higher costs."
The Specialty Paper Group's operating profit was $1.5 million for the first quarter of 2003 compared with a loss of $.9 million during 2002. Shipments increased 11 percent compared with the year-ago period. "These improvements reflect the Specialty Paper Group's growing ability to identify profitable market opportunities such as new food-packaging products, while significantly reducing controllable costs," Mr. Howatt stated. "Most notably, the Group achieved its third consecutive quarter of profitability despite continued sluggish demand."
The Printing & Writing Group, which was most significantly affected by increased energy and market pulp costs, reported first-quarter operating profits of $1.5 million compared with $6.8 million last year. "Shipments of our higher-margin premium papers and consumer products increased 6 percent and 19 percent, respectively, compared with the prior-year period, but cost increases masked the benefits of these significant gains in product mix," Mr. Howatt said. Total Printing & Writing shipments increased 2 percent during the quarter compared with 2002.
The Towel & Tissue Group posted first-quarter operating profits of $4.0 million compared with $5.6 million last year, as a 3 percent increase in shipments only partially offset higher wastepaper and energy costs. "Despite competitive business conditions during the quarter, the Towel & Tissue Group increased sales of higher-margin products at a rate well above market growth levels, which positions the Group for improved results in the future," commented Mr. Howatt.
Commenting on second-quarter business conditions, Mr. Howatt said, "Overall economic weakness continues to affect demand for most of the Company's products, while natural gas costs remain well above historical levels, and market pulp costs continue to be high relative to paper prices. With little opportunity to recover increased costs, we expect second-quarter earnings to fall well short of prior-year levels of $.11 per share, but to exceed our first-quarter results of $.03 per share. Although fully aware of these short-term pressures, we will continue to focus on long-term growth in market share and improved profitability through new-product development, cost-effective operations, and benchmark service to our customers."
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