Abitibi-Consolidated Completes In-Depth Operations Review

Abitibi-Consolidated Completes In-Depth Operations Review
Announces Q2 results; permanent newsprint capacity closures now total 344,000
tonnes



MONTREAL, July 27  /PRNewswire-FirstCall/ -- Abitibi Consolidated Inc. reported
a second quarter loss today of $43 million, or 9 cents a share. This compares to
a loss of $79 million, or 18 cents a share, recorded in the second quarter of
2004. Included in the quarter's results were the following after- tax specific
items: a loss of $47 million on the translation of foreign currencies, namely
the Company's US dollar-denominated debt; a $3 million financial expense for
premiums paid on early debt retirement; and a $1 million expense for the labour
force reduction. These specific items were partially offset by a positive income
tax adjustment of $34 million related to prior year audits.

Although not a GAAP measure, the loss would have been $26 million, or 6 cents
per share, before the impact of the above-noted items in the second quarter.
This compares to a loss of $22 million, or 5 cents a share, in the second
quarter of 2004. (See Table 2 of MD&A)

The Company posted a total operating profit of $69 million during the second
quarter of 2005, with each of its three business segments making positive
contributions. This compares with an operating profit of $51 million in the
same quarter of 2004. The major difference year-over-year was improved paper
pricing, offset by a stronger Canadian dollar, higher manufacturing and
distribution costs. (See Table 1 of MD&A)

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  Q2 2005 Highlights
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  - Sales of $1.48 billion ($1.44 billion in Q2 2004)
  - Our U.S. newsprint price up US$66/tonne from Q2 2004 average
  - ABIOFFSET(TM) shipments up 21% compared with Q2 2004
  - EBITDA of $212 million ($205 million in Q2 2004)
  - Long-term debt reduced by $147 million
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"The strategic review begun at the end of last year is now complete," said John
Weaver, President and CEO. "We are moving rapidly to implement these decisions.
Concrete actions are being taken as we cannot let our timetable be extended or
our plans sidetracked."

In-Depth Operations Review: A recap of decisions

Stephenville, Newfoundland. Although the preferred path forward for operations
in Newfoundland and Labrador included two profitable paper machines at two
locations, after prolonged efforts to resolve Stephenville's energy and fibre
challenges, a solution could not be found. As a result, the mill will be
permanently closed in October 2005, removing 194,000 tonnes of annual newsprint
production.

Grand Falls, Newfoundland. As announced in the first quarter, one 60,000-tonne
machine will be permanently closed.

Kenora, Ontario. Action is being taken to correct the cost position of the
Kenora mill. One machine will be permanently closed in October 2005, removing
90,000 tonnes of newsprint capacity. At the same time, the mill's other
machine, with an annual production capacity of 150,000 tonnes of newsprint,
will be idled for an indefinite period. "We are still engaged in discussions
with the Ontario government trying to find an innovative plan to help mitigate
Kenora's production costs," added Weaver. "Assuming a deal is reached, we will
look at restructuring the mill under a one machine scenario."

Fort William and Northwestern Ontario Woodlands. The process to sell the
150,000-tonne mill as well as 500,000 acres of nearby timberland is well
underway. The Company anticipates completion before year-end.

Lufkin, Texas. As announced in the first quarter, the Company is exploring
several alternatives to re-launch the mill as a coated groundwood producer.
Talks are ongoing with potential paper and energy partners.

The permanent closures at Kenora and Stephenville will result in pre-tax asset
write downs of approximately $75 million and mill closure costs of
approximately $35 million in the Company's third quarter results.

Currency

Compared to the second quarter of 2004, the Canadian dollar has appreciated by
9.3% against the US dollar. The Company estimates the unfavourable impact of
this appreciation on its operating results to be approximately $76 million in
the second quarter of this year. After six months of 2005, the impact is $139
million.

Capex

PanAsia's Hebei mill is now complete and start-up began at the end of the
second quarter, ahead of schedule and approximately 10% below budget. PanAsia
now has a production capacity of approximately 470,000 tonnes of newsprint in
China.

Capital expenditures during the quarter totalled $43 million and were limited
to $101 million for the first six months of 2005.

Banking Covenants

At the end of the second quarter, the Company's net funded debt-to-
capitalization ratio was 66.9% compared to its 70% covenant, and its EBITDA-to-
interest coverage was 2.2x compared to the 1.5x threshold. These covenants only
apply to the Company's revolving credit facility, which was un-drawn at June
30, 2005.

Quarterly Conference Call Information

A conference call hosted by management to discuss quarterly results will be
held today at 11 a.m. Eastern. The call will be webcast at
http://www.abitibiconsolidated.com/ , under the "Investor Relations" section. A
slide presentation to be referenced on the call will also be made available in
the same section prior to the call. Participants not able to listen to the live
call can access a replay along with the slide presentation, both of which will
be archived online.

Abitibi-Consolidated is a global leader in newsprint and commercial printing
papers as well as a major producer of wood products, serving 70 countries from
more than 50 operating facilities on three continents. Committed to the
sustainable forest management of more than 40 million acres through third-party
certification, the Company is also the world's largest recycler of newspapers
and magazines, collecting and consuming the equivalent of more than five
billion newspapers every year.

  Contacts:
  ---------
  Investors and Financial Media
  Lorne Gorber
  Director, Investor Relations and Financial Communications
  [phone]
  

  Others
  Denis Leclerc
  Director, Corporate Affairs
  [phone]
  


  FORWARD-LOOKING STATEMENTS

  This disclosure contains certain forward-looking statements that involve
  substantial known and unknown risks and uncertainties. These forward-
  looking statements are subject to numerous risks and uncertainties,
  certain of which are beyond the Company's control, including: the impact
  of general economic conditions in the U.S. and Canada and in countries in
  which the Company and its subsidiaries currently do business; industry
  conditions, the adoption of new environmental laws and regulations and
  changes in how they are interpreted and enforced; fluctuations in the
  availability or costs of raw materials or electrical power; changes in
  existing forestry regulations or changes in how they are administered
  which could result in the loss of certain contractual or other rights or
  permits which are material to the Company's business; increased
  competition; the lack of availability of qualified personnel or
  management; the outcome of certain litigation; labour unrest; and
  fluctuation in foreign exchange or interest rates. The Company's actual
  results, performance or achievement could differ materially from those
  expressed in, or implied by, these forward-looking statements and,
  accordingly, no assurances can be given that any of the events
  anticipated by the forward-looking statements will transpire or occur, or
  if any of them do so, what benefits, including the amount of proceeds,
  that the Company will derive therefrom.