April 29, 2008 / 5:44 PM / 10 years ago

UPDATE 2-Catalyst Paper results hit by fiber shortages

(Adds details on job cuts)

VANCOUVER, British Columbia, April 29 (Reuters) - Fiber shortages linked to slumping lumber markets caused Catalyst Paper Corp CTL.TO to post a first-quarter loss on Tuesday and announce job cuts at two of its pulp and paper mills.

Catalyst said it will cut about 145 jobs at its Elk Falls mill in Campbell River, British Columbia, a move it said was forced by TimberWest Forest Corp’s TWF_u.TO decision to permanently shut its nearby sawmill operation.

Catalyst had already idled the plant’s No. 1 paper machine because of a lack of adequate wood chip supply, and said TimberWest’s move made it unlikely the machine would be restarted in the foreseeable future.

TimberWest announced in February it would close its Elk Falls sawmill after an unsuccessful effort to sell the facility.

Weak lumber markets linked to the collapse of the U.S. housing market have closed numerous sawmills and logging operations on Canada’s Pacific Coast, which also supply chips to pulp and paper producers.

Catalyst also announced it will cut 82 jobs at its Crofton mill in North Cowichan to lower operating costs.

The job cuts will cost the company about C$4 million ($4 million), it said.

Also on Tuesday, Catalyst posted a net loss of C$37.4 million, or 17 Canadian cents a share, on sales of C$399.5 million. That compares with a net loss of C$25.6 million, or 12 Canadian cents a share, on sales C$478.1 million, a year earlier.

The company said that while the prices it could charge for some of its paper types had increased, that had been offset by the problems caused by a lack of fiber supply.

Catalyst said the shortage forced it to curtail pulp and paper production at its Elk Falls mill by 65,000 tonnes during the quarter. ($1=$1.01 Canadian) (Reporting Allan Dowd; editing by Rob Wilson)

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