Champion International Inc., a
leading paper and wood products company, said on Tuesday its
1998 fourth-quarter profits plummeted 74 percent from a year
earlier due to low prices.
Champion earned $12 million, or 13 cents a share, in the
quarter, before special items, compared with $32 million, or 34
cents a share, in the same period a year ago.
Including special charges, the company had a loss of 7 cents
a share for the quarter.
Wall Street analysts had expected the company to report a
loss of 1 cent a share, according to First Call Corp., which
tracks such forecasts.
Champion's stock took a hit in morning activity Tuesday
following the disappointing earnings news. The shares were off
$1.69 at $38.81 on the New York Stock Exchange.
The Stamford, Conn.-based company blamed its poor results on
low prices for most paper grades and for wood pulp. Low prices
and high inventories have plagued the industry all year.
"It is essential that we continue our efforts to reduce our
manufacturing costs and balance production with customer
demand," Chairman and Chief Executive Officer Richard Olson
said in a news release.
"We are watching the world economic situation very closely,
and, therefore, we are approaching 1999 with caution," he said.
Champion's paper segment saw a 65 percent decline in
operating earnings in the fourth quarter, to $44 million from
$98 million a year earlier.
While the company's wood products segment had a 53 percent
rise in earnings from a year earlier, to $23 million, profits
were down from the third quarter.
Special items in 1998, which were recorded in the fourth
quarter, consisted of an after-tax charge of $49 million for
additional costs associated with the divestiture of the
company's nonstrategic product segments, and an after-tax
benefit of $30 million from the reversal of reserves that are no