Catalyst Paper’s (TSX:CTL) stock price shot up nearly 22% to $0.25 in midday trading Wednesday after the company reported $6 million in net earnings in the third quarter.
The Richmond-based paper producer said the net earnings contrasted with a net loss of $368.4 million in the second quarter though that loss was significantly impacted by impairment, severance and closure costs at its Elk Falls mill and paper recycling division in Coquitlam.
Still, the company posted $322.3 million in sales in the third quarter compared with $299.4 million in sales the quarter before.
Catalyst president and CEO Kevin Clarke said strong paper prices and improved efficiencies at its mills encouraged better results in the third quarter.
“Business conditions are tough but showing signs of improvement,” Clarke said. “Sales volumes and prices were up as North American paper demand stabilized. Our mills and machines ran well enabling us to get the most out of the modest market recovery.”
He also said plant closures helped the company realize some cost savings in the third quarter, and the company has tapped new markets for its paper products.
Clarke joined the company in late June with a commitment to resurrect Catalyst from a multi-year depression that’s slammed its bottom line (See “Catalytic converter” – issue 1095; October 19 to 25).
Although approximately 23% of Catalyst’s newsprint capacity remains indefinitely idled at its Crofton mill, the company believes the Elk Falls closure will create a cost savings of $13 million next year.
The company’s stock has soared more than 177% since September 2 when it hit a 52-week low of $0.09, though it is still well below the 52-week high of $0.44 set April 21.