The B.C.-based pulp and paper producer, which was delisted in March 2012 but returned to the TSX earlier this year, reported a net loss of $9.8 million, or 89 cents per share.
The firm says the results compare to a year earlier when it posted a deeper loss of $25.6 million or a loss of seven cents per share.
Net income was helped by the sale of its Snowflake recycle mill in northeastern Arizona and its subsidiary, the Apache Railway Co. in January, and the shedding of its 50 per cent stake in Powell River Energy Inc. in March, the company said.
Operating losses were $1.2 million from a $9.6 million profit a year ago.
Sales dropped to $247.1 million from $267.2 million in comparable period a year earlier.
"The Chinese economic rebound has driven pulp shipments and prices up," said president and CEO Kevin Clarke in a release.
He said the company's paper operations faced "tougher conditions" that saw a 10 per cent drop in newsprint demand and a 15 per cent decline in directory paper.
"Labour costs also tipped up due to unforeseen maintenance requirements," Clarke added.
The company expects specialty paper prices to remain under pressure, while newsprint demand will further weaken, it said.
Catalyst returned as a publicly traded company on the Toronto Stock Exchange in January, after it completed a court-supervised restructuring last June.
Clarke has announced he will step down from the company this summer, though a successor hasn't been named.