Paper maker Boise benefits from tax credit

Paper maker Boise Inc. reported a $48.2 million profit for the third quarter, more than 10 times the $4.4 million that the company made in 2008's third quarter.

The firm, which operates a 585-employee paper mill in Jackson, Ala., continued to get a big boost from the federal alternative fuel tax credit, where the federal government pays the firm for mixing diesel fuel with black liquor, a byproduct of making pulp.

Boise received $59.6 million in credits in the quarter. Without a benefit from the tax credit, Boise would have made a narrow profit.

Chief Executive Alexander Toeldte said Boise has tried to avoid making more paper than it otherwise would because of the tax credit, but said he wasn't sure that all competitors had abided by the same principle, and wasn't sure how the market would react when the credit expires at year's end.

The firm made 57 cents a share, compared with 6 cents in the 2008 quarter. The only analyst who posted an estimate expected 8 cents. Such figures sometimes omit the tax credits.

Sales fell to $508.3 million, down almost 20 percent from $633.1 million in 2008's July-September quarter. Some of that came from the partial closure of a mill in St. Helens, Ore., while some came from decreasing prices for paper and boxes.

Though paper sales fell 15 percent in the third quarter, Toeldte told analysts on a conference call that demand for office papers seemed to stabilize in the late summer. He said Boise plans a $40-per-ton price increase for some kinds of paper in the fourth quarter.

Toeldte said the company plans its regular maintenance outage in Jackson late this year, running from five to 10 days depending on paper demand. Officials said hardwood prices have increased 5 percent to

7 percent in Jackson in recent weeks, in part because wet weather has limited logging.

Corporate leaders said that a debt restructuring completed in October, which stretched out repayments, lowered interest rates and eased other strictures, would be a big boost in the future for Boise, based in the Idaho city of the same name. Boise still carries $1 billion in debt, left from when it was spun off as an independent company.

Toeldte said the company expects slightly slower business in the fourth quarter, in part because of normal holiday slowdowns.

"The outlook for the economy still remains fraught with risk," he said.