CONSOLIDATED-BATHURST SEES BETTER MARKET (Consolidated-Bathurst Inc) said it expects improvement in the pulp and paper sector shown in the second half of 1986 to continue this year. The continued improvement would be due to good market demand, better product prices and high operating capacity, the company said in its annual report. Consolidated-Bathurst, which reported operating profit of 104 mln dlrs last year on sales of 2.02 billion dlrs, said its joint-venture acquisition of a market pulp mill at Castlegar, B.C. last year broadens its product range and will contribute to equity earnings. Last year's results were up from 1985 operating profit of 80 mln dlrs and sales of 1.73 billion dlrs. The company said it views its near-term prospects with improved optimism. It said results from its Bridgewater newsprint mill in the U.K. should improve greatly this year due to stronger capacity and production and more favorable market conditions. It said it anticipates a return to profitability in 1987 for its Diamond-Bathurst Inc (DBH) subsidiary, which lost 6.2 mln U.S. dlrs and underwent a reorganization last year, and expects higher sales and earnings for its other North American packaging divisions. Consolidated-Bathurst said the outlook for its Europa Carton unit is mixed. It said the effect of trade disputes between the United States and the European Economic Community on the West German economy and the higher value of the mark may lead to increased costs which could not be offset by price increases.