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Abitibi forecasts return to $1.5 billion in profits

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MONTREAL—Newsprint giant AbitibiBowater hopes to exit court-supervised restructuring in October and hopes to earn more than US$1.5 billion in net profits over the next four years.

The Montreal-based company expects to overcome a projected US$427 million loss this year to earn US$295 million in 2011, US$387 million in 2012, US$384 million in 2013 and US$445 million in 2014, according to a report filed with the Quebec Superior Court.

Revenues are forecast to grow by 14.5 percent to US$5.34 billion in 2011 from US$4.66 billion in 2010. They would then remain stable through 2014.

AbitibiBowater expects its enterprise value will be US$3.7 billion including US$1.25 billion in debt. Its new stock would be valued at US$2.4 billion.

Last month, AbitibiBowater said it reined in losses in the second quarter to US$297 million in the three-month period ended June 30, compared with $510 million in the same year-ago quarter.

Revenues grew 14 percent to US$1.18 billion from US$1.04 billion on higher prices for paper, pulp and wood products, though the results were negatively affected by lower prices for specialty papers.

Despite the improved results, the company still faced the impact of a higher Canadian dollar, which reduced earnings by US$68 million.

AbitibiBowater has been under protection from creditors since April 2009. Its creditors are expected hold a vote on a restructuring plan for the company on Sept. 14, which should allow it to emerge from creditor protection on Oct. 14.

AbitibiBowater has cut 6,000 jobs and dramatically reduced its paper and wood capacity by shutting down mills as it prepares to exit creditor protection.

The Montreal company hopes to emerge as a lower-cost producer better able to absorb market and currency fluctuations.

The newsprint market has been hit hard by a decline in demand as the newspaper industry suffered through the 2008-2009 recession and the rise of Internet news affected traditional advertising.

As well, some newspapers shut down and others transformed themselves into strictly web-based publications, further reducing demand for newsprint.

The lumber sector was squeezed by a decline in demand as the U.S. housing sector sank in the wake of the sub-prime mortgage crisis.

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