 Weekly Food Archive
Airlines |
| This Week in Paper by Joe Masters (MF Master) Charleston, SC (Mar. 14, 1997) -- HE SHOOTS! HE SCORES!! Ahhh..."March Madness." As we dribble our way into a look at the past week, we noted an early continuation of the rebound from Mr. Greenspan's comments of two weeks ago, with Dow records set on both Monday and Tuesday. However, a full-court press on Thursday stopped the offense in its tracks. While a couple 3-point shots on Friday helped matters, the Dow still managed to lose 0.93% for the week, with the S&P down 1.47%. Our Paper/Forest index faired much better and actually gained 0.22%. Leading the charge were FORT HOWARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FORT)") else Response.Write("(Nasdaq: FORT)") end if %>, up 3.94%, WILLAMETTE INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WLL)") else Response.Write("(NYSE: WLL)") end if %>, rising 3.70%, INTERNATIONAL PAPER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IP)") else Response.Write("(NYSE: IP)") end if %>, gaining 2.06%, and MEAD CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MEA)") else Response.Write("(NYSE: MEA)") end if %>, up 1.74%. Fouling out this week were JEFFERSON-SMURFIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JJSC)") else Response.Write("(Nasdaq: JJSC)") end if %>, down 5.93%, BOISE-CASCADE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:BCC)") else Response.Write("(NYSE:BCC)") end if %>, dropping 2.22%, and GAYLORD CONTAINER <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: GCR)") else Response.Write("(AMEX: GCR)") end if %>, off 1.89%. Will the remainder of March be equally as mad as the past few weeks? Well, it ain't over 'till its over. And Now for the News: On Monday, Suomen Optioporssi, a Finnish options exchange, put the value of northern bleached softwood pulp at $525.78 per ton, down from $539.34 last week. In February, the PIX mean was $546.59, down from $556.86 in January and $559.05 in December. Reported on Tuesday: Demand for toilet paper in the world is increasing, with an annual growth of 5.3%, according to AsiaInfo Services of China. It's estimated that the total demand will reach 16.78 million tons in 2000 and 23.45 million in 2005. At present, average annual consumption per person is three kilograms in the world. In 2005, annual consumption will amount to 23.4 kilograms in North America, 14.3 kilograms in Western Europe, 2.1 kilograms in East Europe, 16.7 kilograms in Japan, 1.6 kilograms in China. The average of the world will reach 3.5 kilograms. Also Tuesday, The American Forest & Paper Association (AF&PA) said it plans to escalate its efforts to bring forward the abolition of European tariffs on paper products. Getting those tariffs removed was a top priority for the AF&PA, and because its attempts at persuasion hadn't succeeded, it decided to step up its lobbying activities. At last December's meeting of the General Agreement on Tariffs and Trade, the European Union rebuffed a call by Canada and the U.S. to eliminate tariffs on paper and wood products on Jan. 1, 1998. There is currently a GATT agreement to scrap those tariffs in 2004. Finland was identified as the major opponent of trade liberalization. A release from the AF&PA said while Finland sold about $700 million of high-value-added paper in the U.S. in 1995, U.S. exports to Finland were ''negligible." Indonesia was also criticized for its use of tariffs to protect its own paper products industry. ''The Indonesian paper industry is world class by any standard, and should now step forward and agree to a zero-for-zero commitment as an absolute minimum requirement for continued preferential treatment by the United States," an AF&PA release says. "There is no reason for tariffs in Europe opposed to the U.S.,'' the AF&PA said. ''They're just as good as us and in some cases better." Claiming that European paper producers would be unable to compete without tariffs was ''like saying that Mercedes can't compete with Cadillac,'' the association said. U.S. paper products are currently levied with tariffs of up to 7.2% by the E.U. That doesn't sound like a lot, but the association warned that ''the margin of the tariff can well be the margin of profit." Exports are of growing importance because the U.S. is a mature market for forest and paper products. The AF&PA estimates that abolition of tariffs would translate into between $1 billion and $1.5 billion in additional exports for the U.S. immediately, and $2 billion by 2000. Currently about 20% of U.S. paper products are exported. On Wednesday, U.S. OFFICE PRODUCTS CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OFIS)") else Response.Write("(Nasdaq: OFIS)") end if %> said it completed the acquisition of 11 office supply companies for $22.9 million in cash and stock. The purchase price included $18.3 million in U.S. Office Products shares and $4.6 million in cash. In a press release, the company said the acquisitions include three hub companies, which are larger businesses in major metropolitan locations, and eight spoke operations, which are smaller businesses located in secondary markets surrounding hubs. The 11 companies generate about $80 million in annual revenues, according to U.S. Office Products. Also Wednesday, MOSINEE PAPER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MOSI)") else Response.Write("(Nasdaq: MOSI)") end if %> said it expects a report later this week from Nasdaq on an inquiry the company made into a sharp drop in its stock at the end of February. "We may end up on a different stock exchange if there isn't a good answer for it," Daniel Olvey, chief executive of the Mosinee, Wisconsin-based paper manufacturer, said in an interview. According to Olvey, the stock fell 4-1/2 points in just over an hour around noon, on 33,000 shares. The stock ended that day down three at $33-1/4. "That happened on absolutely no announcement or no news," Olvey said. Average daily volume in the stock was 21,500 in 1996, but jumped to 57,000 in the first two months of 1997, according to a Nasdaq spokesman. Olvey would not speculate on what might have caused the stock to drop. The Nasdaq spokesman said the exchange was aware of the Mosinee situation, but would not comment on any specific action it was taking. In a separate report, Mosinee Paper Corp. said it was comfortable with an analyst estimate calling for first quarter earnings of $0.65 a share, up from $0.44 a share a year ago. "We think that's reasonable and that shouldn't be any problem for us at all," Mosinee chief executive officer Daniel Olvey said in an interview. He also backed the consensus estimate of $3.18 a share for all of 1997, up from $2.56 in 1996. Finally Wednesday, WESTVACO CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: W)") else Response.Write("(NYSE: W)") end if %> priced $150 million of sinking fund debentures via lead manager Goldman Sachs & Co. Terms were for 30 years at 7.694% yield. On Thursday, Swedish non-traded forestry group Sodra Skogsagarna said that North American and Scandinavian (NorScan) pulp stocks rose 70,000 tons in February from January to more than 2.1 million tons. Canadian pulp stocks increased the most in February, up 49,000 tons, while U.S. stocks rose 24,000 tons and Swedish stocks increased by 1,000 tons. In Finland, pulp stocks fell by 4,000. Also Thursday, AMERICAN ISRAELI PAPER MILLS LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: AIP)") else Response.Write("(AMEX: AIP)") end if %> reported 1996 fourth quarter and year-end financial results. onsolidated sales for the fourth quarter ended December 31, 1996 totaled NIS 275.9 million ($84.9 million), compared with sales of NIS 264.8 million ($81.5 million) for the same quarter a year ago. Consolidated sales for the year 1996 totaled NIS 1,100.9 million ($338.6 million), compared with NIS 1,119.5 million ($344.4 million) for 1995, and NIS 890 million ($273.8 million) for 1994. Sales for 1995 included the sales of C.D. Packaging Systems Ltd. totaling NIS 11.7 million ($3.6 million). Earnings per share for 1996 totaled NIS 21.49 ($6.61 per share) as compared with NIS 18.71 ($5.76 per share) last year. Earnings per share net of capital gains from the issue of shares to KC and before the minority share in Hogla-Kimberly profits, totaled NIS 13.56 ($4.17 per share) as compared with NIS 18.71 ($5.76 per share) last year. For the fourth quarter, earnings per share were $0.78 for 1996 compared to $1.48 for the same period in 1995. In addition on Thursday, ST. JOE CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SJP)") else Response.Write("(NYSE: SJP)") end if %> announced annual net income for 1996 of $176.0 million ($5.77 per share), an increase of 138% from the previous year. Net income for the year ended December 31, 1996 was up from $73.8 million ($2.42 per share) for the year ended December 31, 1995. The company's net income for the quarter ended December 31, 1996, was $8 million ($0.25 per share) compared with $14.8 million ($0.49 per share) for the same period in 1995, a decrease of 46 percent. Income from continuing operations of St. Joe for 1996 was $91.9 million ($3.01 per share) compared with $29.4 million ($0.96 per share) for 1995, a 213 percent increase. Fourth quarter income from continuing operations was $15 million ($0.49 per share) compared with $8 million ($0.26 per share) for the fourth quarter of 1995. On Friday, Finnish forest industry groups ENSO OY (EOYRV.HE) and MeETSA-SERLA OY (MESSb.HE) reported it expects pulp prices to rise five to ten percent in May. "I don't see any reason why this would not happen... inventories are running down, paper consumption is good and no new capacity is coming," said Enso Fibres' managing director Simo Pesola. (Editor's Note: Inventories are running down and no new capacity is coming? I must have missed something....see next.) Also Friday, Prudential Securities cut earnings estimates for the paper stock sector due to rising inventories and renewed pricing weakness. And Friday, Smith Barney Inc. downgraded ARACRUZ CELULOSE S.A. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARA)") else Response.Write("(NYSE: ARA)") end if %> to outperform from buy. The firm cited an expected delay in the recovery of pulp prices. Reported Friday: Canadian newsprint output fell 1.6% in January, to 804,000 metric tons from 817,000 tons a year earlier, according to the the Canadian Pulp and Paper Association. Canadian mills operated at 94% of capacity during January, down from 97% a year earlier. Consumption by U.S. daily newspapers was up 4.7%, to 734,000 tons from 701,000 tons a year earlier. Total U.S. newsprint consumption rose 6.7%, to 899,000 tons from 842,000 tons. Total U.S. consumers' stocks rose to 1.26 million tons at the end of January, or 42 days of supply, from 1.23 million tons, or 42-days' supply, at the end of December, the association said. Canadian producers' stocks rose to 489,000 tons in January from 428,000 tons in December. Also Friday, CONCORDIA PAPER (HOLDINGS) LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPLNY)") else Response.Write("(Nasdaq: CPLNY)") end if %> announced its results for the year ended December 31, 1996. In the fourth quarter of 1996, Concordia recorded a net loss of USD 0.87 million compared to a net loss of USD 4.45 million in the same period for 1995. A net loss for the year ended December 1996 of USD 3.21 million was recorded compared to a loss of USD 2.03 million for the year ended December 1995. Loss per ADS was USD 0.10 in the fourth quarter 1996 and USD 0.35 for the full year 1996. Consolidated net sales increased by 27.1% from USD 20.96 million in the fourth quarter 1995 to USD 26.65 million in the fourth quarter 1996. Net sales for the full year 1996 were USD 107.92 million, an increase of 45.4 % when compared to 1995. "Model Portfolio" Update: Slumping a bit this week was CARAUSTAR INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSAR)") else Response.Write("(Nasdaq: CSAR)") end if %> on no particular news. The momentum on this issue seems to have halted when the company announced in ITS recent quarterly report (2/4/97) of the potential that the first half of 1997 may not outperform the results from the first half of 1996. Of course, we are looking beyond this and still believe Caraustar offers great potential for future appreciation. FORT HOWARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FORT)") else Response.Write("(Nasdaq: FORT)") end if %> continues to be strong and reached an all-time high of $33 per share on Friday. Purchase: IP = $40.50, FORT = $27.69, CDP = $49.13, CSAR = $29.00 Last Trade: IP = $43.38, FORT = $33.00, CDP = $52.13, CSAR = $27.00 This Week: Year-to-Date: Model = - 1.53 % Model = + 16.56 % SP500 = - 1.47 % SP500 = + 7.08 % FSPFX = - 0.55 % FSPFX = + 1.36 % Commentary: Time now for a quick refresher course and a few more numbers. I have written in the past about the cyclical nature of the industry as it pertains to vacillations which occur in the general economy. Strong growth creates a greater demand for wood and paper, and vice versa. Simple enough? I've also mentioned, though, that this variability depends greatly upon what grades of paper are produced by the company being examined. Highly cyclical grades include containerboard (i.e., linerboard and corrugating medium) and pulp. Slightly less cyclical are newsprint and printing/writing grades, along with bleached food board. Finally, tissue and toweling grades exhibit little tendency to vary in price due to changes in economic conditions. Taking a look at our "index" companies, we note the following breakdown by product type expressed as the approximate percentage of the company's total paper/paperboard manufacturing capacity: Boise-Cascade = 50% printing/writing, 25% containerboard, 15% newsprint, 10% pulp Bowater = 70% newsprint, 20% printing/writing, 10% pulp Champion = 60% printing/writing, 15% newsprint, 10% containerboard, 10% pulp, 5% board Consolidated = 75% printing/writing, 25% pulp Fort Howard = 100% tissue Gaylord Container = 100% containerboard Georgia-Pacific = 35% containerboard, 25% printing/writing, 25% pulp, 10% board, 5% tissue Int'l Paper = 30% printing/writing, 30% board, 25% containerboard, 15% pulp James River = 40% printing/writing, 35% tissue, 15% board, 5% newsprint, 5% pulp Kimberly-Clark = 100% tissue Mead Corp = 55% printing/writing, 45% containerboard PH Glatfelter = 60% printing/writing, 40% pulp Potlatch = 45% pulp, 30% board, 15% printing/writing, 10% tissue Jefferson-Smurfit = 55% containerboard, 25% board, 20% newsprint Stone Container = 70% containerboard, 15% newsprint, 10% pulp, 5% printing/writing Temple-Inland = 80% containerboard, 15% board, 5% pulp Union Camp = 60% containerboard, 35% printing/writing, 5% pulp Westvaco = 40% containerboard, 30% printing/writing, 25% board, 5% pulp Weyerhaeuser = 35% containerboard, 35% pulp, 15% printing/writing, 10% newsprint, 5% board Willamette = 55% containerboard, 35% printing/writing, 10% pulp Of course this is not the entire picture. Many of these companies have an interest in wood products, especially Georgia-Pacific, Weyerhaeuser, Willamette, Champion, Boise-Cascade and Temple-Inland. Building products are also affected by the prevailing economic conditions. However, this should provide you with a decent impression of which companies are more or less susceptible to the inevitable changes which occur on a national and global basis. Any questions? Class dismissed. Keep them presses rolling !!! |
© Copyright 1995-2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. The Motley Fool is a registered trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us