Lower pulp prices and capital investments “overshadowed” a strong fourth quarter for Fortress Paper (TSX:FTP), the company said Tuesday.
According to its 2010 fourth-quarter results, the Vancouver-based bank note printer posted a net loss of $0.8 million on sales that totalled $83.5 million.
That’s compared with a net income of $4.8 million on sales of $51 million for the same quarter in 2009.
The paper producer said the fourth quarter continued to reflect strong profitability at its Dresden operations, where it produces wallpaper, but weakening pulp prices and a paper machine rebuild at its Landqart mill in Switzerland had a negative impact on fourth-quarter earnings.
Still, Fortress managed to remain in positive financial territory in 2010, with a $10.4 million net income for the year compared with $13.8 million the year before.
Meanwhile, the company has continued converting its Thurso mill in Quebec into a dissolving pulp producer.
In a recent interview, Fortress CEO Chad Wasilenkoff said when the Thurso conversion is complete, the dissolving pulp will be sold to manufacturers who use it to produce rayon, which is then made into clothing.
He told Business in Vancouver the mill will have a “monumental impact” on the company’s overall profitability, and he’s looking to buy more dissolving pulp mills in the near term.
According to Wasilenkoff, the company’s focus on small, niche markets such as bank notes, wallpaper and dissolving pulp will allow it to grow in the coming years while other forestry companies struggle to recover from the downturn.
“So while the rest of the industry goes on tough or challenging times, we’re firing on all cylinders,” Wasilenkoff said.
At press time, Fortress’ shares were down 9% to $44.36.