Richard GarneauA stronger loonie means yet another challenge for the newly anointed head of Catalyst Paper Corp. (TSX:CTL), according to one analyst.
The Richmond-based company, which operates five mills in B.C., handed the corporate reigns over to director Denis Jean last week following the departure of president and CEO Richard Garneau.
The announcement was made among a series of management changes intended to strengthen the company’s executive leadership amid a challenging pulp and paper market and ongoing municipal tax fights.
For more about what that means for the company check out this week’s edition of Business in Vancouver. While BMO Nesbitt Burns Securities analyst Stephen Atkinson said Jean’s promotion is good for the company, a stronger Canadian dollar isn’t.
“When the Canadian dollar moves up the union contracts become more expensive in a relative sense, meaning relative to the U.S.,” Atkinson told BIV.
At press time, one Canadian dollar was worth US$0.95. Although pulp and paper prices have rallied in recent weeks, 42% of Catalyst’s production capacity was curtailed in 2009 in an effort to weather the financial storm. Atkinson believes only the lowest cost mills will survive B.C.’s challenged forest economy.
The company’s 2009 annual report was titled Driving Efficiency, and spokeswoman Lyn Brown said Jean would likely continue Garneau’s strategy to conserve cash, improve liquidity and reduce costs.
Atkinson called Jean a cost-reduction expert, but added that pulp and paper companies around the country need to find a better way to communicate to government the challenges they face.
“It’s still a situation where the provincial ministers don’t realize that you can tax a business into bankruptcy,” he said. Catalyst’s share price during the past week: between $0.19 and $0.17. 52-week high: $0.44; 52-week low: $0.15.