Buckeye Technologies has released disappointing financial results for the October-December quarter. Net sales of $184.7 million for the quarter were down 12.4% compared to the same quarter a year ago and were down 16.6% versus the record July-September quarter. Meanwhile, net quarterly income was $2.6 million, a substantial drop from $13.9 million during the same quarter of 2007.
Chairman and CEO John Crowe said, "This has been a challenging quarter for Buckeye, as the global economic recession has reduced demand for some of our products. While demand for most of our high-end specialty wood products remains solid, demand for our specialty cotton fibers has weakened significantly.” He added that sales of airlaid nonwoven products were also down primarily due to customer inventory reductions and normal seasonal weakness in Europe in December.
As previously announced, Buckeye took market downtime at its Foley, Memphis and Americana plants during the quarter to match production to shipment demand. In addition to a company-wide focus on reducing costs and maintaining tight control over working capital, Buckeye has reduced planned capital spending for this fiscal year from $64 million to $40 million in order to accelerate debt reduction efforts.
Mr. Crowe went on to say, "Because of our restructuring efforts over the last few years, which included closing high cost capacity, lowering our operating costs, and reducing our debt from $700 million to under $400 million, we believe we are well positioned to deal with this economic downturn. While our visibility into future order trends at the moment is poor, we expect that the January-March quarter will show improved profitability at similar revenue levels as compared to the quarter just completed. While we expect fluff pulp prices to decline, we have instituted price increases in our high-end wood specialty markets effective January 1 and energy and transportation costs are down. Caustic prices will start to come down in February, but our average caustic cost for the quarter is still likely to be higher than it was in the October-December quarter."