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Rubber and Wood May 09, 2019 02:30:46 PM

Spiraling Hardwood Lumber Costs Drag Rayonier to Substantial Loss in Q1

Paul Ploumis
ScrapMonster Author
The operating income from High Purity Cellulose segment declined by $24 million compared to first quarter in 2018.

Spiraling Hardwood Lumber Costs Drag Rayonier to Substantial Loss in Q1

SEATTLE (Scrap Monster): Rayonier Advanced Materials, Inc. reported net loss of $22 million in the first quarter of 2019, as compared with the net income of $24 million for the corresponding quarter in 2018. The disappointing results were mainly due to notable jump in hardwood costs at Jesup plant and unplanned downtime at Temiscaming plant, which ultimately led to significant operating loss in High Purity Cellulose segment.

The operating income from High Purity Cellulose segment declined by $24 million compared to first quarter in 2018. The Forest Products operating income witnessed a decline of $15 million over the previous year. Also, the operating income from the Pulp and Paper segments were down by $10 million and $4 million respectively, as compared with Q1 2018.

The company expects stronger performance from High Purity Cellulose segment during the remainder of the year. The longer term prospects of a stable U.S. housing market and anticipated benefits from recent investments are expected to drive Forest Products segment profitability. Pulp segment is likely to deliver historically strong yearly results in 2019. However, paperboard prices are likely to experience further pressure.

The company remains confident of opportunities to drive EBITDA growth, despite a difficult quarter, said Paul Boynton, Chairman, President and Chief Executive Officer. Rayonier plans capital expenditure of nearly $100 million on maintenance projects in 2019. Additionally, $30 million will be spent on high-return strategic projects during the current year.

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