Verso Paper Corp. generated $1.77 billion in sales during 2008, up from $1.63 billion in 2007. The company trimmed its net loss from $111.5 million a year ago to $62.8 million for the year ended Dec. 31, 2008.
Much of the loss was due to retiring debt, including a prepayment penalty.
Much of the revenue growth was due to a 16.5% increase in the average sales price per ton for all products. Sales volume fell by 6.8% from 2007’s level.
Within various paper stocks, sales for the coated and supercalendered papers segment were $1.58 billion in 2008, compared to $1.44 billion in 2007, an increase of 9.1%. The improvement reflects a 17.2% increase in average paper sales price which was partially offset by a 6.9% decrease in paper sales volume for 2008.
Net sales for the hardwood market pulp segment were relatively stable at $146.4 million in 2008, compared to $148.0 million in 2007. During 2008, a 9.3% decrease in pulp sales volume was largely offset by a 9.1% increase in our average pulp sales price.
Net sales for the other segment increased 20.7% to $45.4 million in 2008, from $37.6 million in 2007. This increase reflects an 11.4% increase in average sales price combined with an 8.4% increase in sales volume compared to 2007.
“…[D]emand for coated papers has weakened, reflecting contraction in the advertising and print media markets that we supply,” said Verso CEO Mike Jackson, in a statement. “This weakened demand is exacerbated by customers’ elevated inventory levels, which were built during a time of price increases during 2008 as well as a reaction to significant permanent capacity reductions during the second half of 2007.”
Jackson continued, “[W]e have moved to curtail production to match supply with demand to manage working capital and stabilize our business. Accordingly, we took almost 75,000 tons of downtime in fourth quarter 2008, and, as previously announced, intend to take an additional 100,000 tons of downtime during the first half of 2009.”
Jackson concluded, “The economy will reset and marketers are aggressively rethinking their media mix. We believe many are seeing that print on paper can improve their reach and sales.”
The Querent’s Take: An open question to readers involved in paper purchasing and hedging: What financial information from a stock producer is most useful to you? Raw tonnage of various stocks, if available? Revenue divided by cost to produce, which might give some latitude in negotiating price? Other? And a general question: Is Jackson’s optimism about the return to paper-based marketing merely industry braggadocio, or when the rebound starts – which it will, some day – will paper-based targeted marketing be a differentiator?
