Buckeye expects breakeven results for January-March quarter
25 Mar '06
3 min read
Specialty fibers maker Buckeye Technologies Inc expects its profitability for the January-March quarter will be near breakeven. This would be significantly below the $4.1 million (11 cents per share) earned in January-March 2005.
The company had previously indicated that it expected January-March earnings to be slightly better than the $1.9MM (5 cents per share) earned in October-December 2005. We now believe we will fall short of that level. Manufacturing difficulties at our large wood pulp mill in Florida related to the startup of new equipment and transportation issues which reduced revenue have negatively impacted our business.
The financial shortfall versus the comparable period last year is due to the following:
-- The company's recently upgraded cotton cellulose manufacturing facility in Americana, Brazil began to ship market pulp in February. The plant is currently providing trial quantities for customer qualifications. Although it will make some market sales this quarter, it will not produce significant revenue until later this year. The combination of startup costs being incurred this year and the loss of the profitability from the tolling operations which the company received in January-March 2005 will result in a negative impact of about $4.5 million pre-tax, or 8 cents per share this quarter.
-- The company continued to experience high energy costs in January and February, but recent trends indicate that energy costs are returning to more normal levels. We implemented price increases averaging 8 percent on specialty wood cellulose products in January.
marketing@alchempro.com
