VANCOUVER, BC, Feb. 24, 2021 /CNW/ - Canfor Pulp Products
Inc. ("CPPI") (TSX: CFX) today reported 2020 and fourth quarter
2020 results:
Overview
- 2020 reported operating loss of $56
million; net loss of $22
million, or $0.34 per
share
- Fourth quarter of 2020 reported operating loss of $28 million; net loss of $10 million, or $0.16 per share
- Strong balance sheet maintained, net debt to capitalization of
7.5% at December 31, 2020
Financial Results
The following table summarizes selected financial information
for CPPI for the comparative periods:
|
|
Q4
|
|
Q3
|
|
YTD
|
|
Q4
|
|
YTD
|
(millions of Canadian
dollars, except per share amounts)
|
|
2020
|
|
2020
|
|
2020
|
|
2019
|
|
2019
|
Sales
|
$
|
237.8
|
$
|
226.4
|
$
|
990.5
|
$
|
247.5
|
$
|
1,087.9
|
Reported operating
income (loss) before amortization
|
$
|
(6.2)
|
$
|
(8.7)
|
$
|
26.1
|
$
|
0.1
|
$
|
61.9
|
Reported operating
loss
|
$
|
(28.3)
|
$
|
(27.6)
|
$
|
(56.1)
|
$
|
(23.5)
|
$
|
(31.0)
|
Adjusted operating
income (loss) before amortization1
|
$
|
(9.2)
|
$
|
(11.7)
|
$
|
17.6
|
$
|
(2.9)
|
$
|
72.6
|
Adjusted operating
loss1
|
$
|
(31.3)
|
$
|
(30.6)
|
$
|
(64.6)
|
$
|
(26.5)
|
$
|
(20.3)
|
Net loss
|
$
|
(10.2)
|
$
|
(18.1)
|
$
|
(22.4)
|
$
|
(19.5)
|
$
|
(30.5)
|
Net loss per share,
basic and diluted
|
$
|
(0.16)
|
$
|
(0.28)
|
$
|
(0.34)
|
$
|
(0.30)
|
$
|
(0.47)
|
1 Adjusted for inventory write-downs
and recoveries ($3.0 million net recovery in Q4 2020; $3.0 million
net recovery in Q3 2020; $3.0 million net recovery in Q4
2019).
|
2020 was a turbulent year for Canfor Pulp and its employees with
the coronavirus outbreak ("COVID-19") taking a heavy toll on global
pulp markets as well as supply channels. The Company responded
decisively to an unprecedented number of challenges, moving quickly
to adopt new safety protocols, take significant fibre-related
production curtailments and defer scheduled major maintenance
outages. The year also saw a major rebuild of the lower furnace of
the number five recovery boiler ("RB5") at the Company's Northwood
Northern Bleached Softwood Kraft ("NBSK") pulp mill ("Northwood")
to ensure the safe and reliable operation of that boiler, which
significantly reduced production volumes in the fourth quarter. On
a positive note, the Company ended the year with a strong balance
sheet and healthy inventory levels and, with the RB5 rebuild now
completed, is well placed to capitalize on an increasingly positive
market outlook for 2021.
The COVID-19 related disruptions and capital-related downtime
weighed on Canfor Pulp's financial results for 2020, with the
Company reporting an operating loss of $56.1
million and a net loss of $0.34 per share, compared to an operating loss of
$31.0 million and net loss of
$0.47 per share for the year ended
December 31, 2019.
For the fourth quarter of 2020, the Company reported an
operating loss of $28.3 million,
compared to an operating loss of $27.6
million reported for the third quarter of 2020. The loss in
the current period reflected continued soft market conditions and
weak prices on pulp shipments as well as the capital-related
downtime at Northwood. Compared to the third quarter of 2020, unit
sales realizations were relatively unchanged with a 2% stronger
Canadian dollar offsetting a modest uplift in prices towards the
end of the period; reduced production from the Northwood RB5 lower
furnace rebuild mostly offset the impact of material production
curtailments in the previous quarter. The lower furnace replacement
was completed mid-January, as planned, with a total capital cost of
approximately $27.0 million and total
reduction in NBSK pulp production of 70,000 tonnes (60,000 tonnes
in the current quarter and a further 10,000 tonnes in January 2021).
Global pulp prices edged upwards through October and November,
with more solid increases seen in December, particularly in
China, driven largely by global
logistic constraints and improving global pulp inventory levels (35
days at December 2020, a decrease of
7 days from September 2020) combined
with strong indicators from the Shanghai Futures Exchange on future
pulp US-dollar list prices. The effects of these price increases
were only partially reflected in the fourth quarter's results,
largely reflecting the timing of shipments versus orders.
NBSK pulp list prices to China
averaged US$637 per tonne, as
published by RISI, up US$65 per tonne
from the previous quarter, largely as a result of successive price
increases implemented through the fourth quarter of 2020, most
notably in December. However, as mentioned, the Company's overall
NBSK pulp unit sales realizations were broadly in line with the
previous quarter, principally reflecting the timing of shipments
(versus orders), as well as the stronger Canadian dollar. Slightly
higher Bleached Chemi-Thermo Mechanical Pulp ("BCTMP") unit sales
realizations in the fourth quarter of 2020 reflected a gradual and
modest improvement in BCTMP demand and prices.
Energy revenues were broadly in line with the prior quarter as
decreased energy generation due to the aforementioned Northwood
capital-related downtime was offset by seasonally higher energy
prices in the current quarter.
Pulp production was 233,000 tonnes for the fourth quarter of
2020, up 6,000 tonnes, or 3%, from the previous quarter, primarily
reflecting the quarter-over-quarter impact of downtime. In the
current quarter, pulp production was reduced by the completion of
Northwood's scheduled maintenance outage in October (approximately
25,000 tonnes), as well as the aforementioned extended outage on
one production line at Northwood to enable the replacement of RB5's
lower furnace (approximately 60,000 tonnes). In the third quarter
of 2020, the combined impact of COVID-19 related curtailments at
the Company's Intercontinental and Prince
George ("PG") pulp mills, as well as scheduled maintenance
outages at Taylor BCTMP mill ("Taylor") and Northwood, reduced pulp
production by 68,000 tonnes. To a lesser extent, improved
productivity at the Company's PG and Taylor pulp mills in the current quarter more
than offset several operational issues at the PG pulp mill in the
prior quarter.
The Company's pulp shipments totaled 258,000 tonnes, up
9,000 tonnes, or 4%, from the previous quarter, principally
due to a drawdown of inventory in the current quarter during the
aforementioned Northwood downtime and, to a lesser extent, the
timing of vessels quarter-over-quarter.
Pulp unit manufacturing costs were slightly lower than the prior
quarter as the benefit of reduced fibre costs in the current
quarter mostly offset seasonally higher energy costs, as well as
increased energy usage and operating labour and maintenance spend,
following COVID-19 related curtailments in the prior period. The
decrease in fibre costs was primarily driven by an increased
proportion of lower-cost sawmill residual chips, mostly due to
higher operating rates at Canfor's sawmills.
Operating income in the Company's paper segment was $4.8 million, broadly in line with the previous
quarter, as significantly higher paper shipments and production
accompanied by lower paper unit manufacturing costs offset the
impact of moderately lower paper unit sales realizations mostly due
to changes in regional sales mix and a stronger Canadian
dollar.
In early 2021, global softwood kraft pulp market conditions have
strengthened significantly in response to improved market
fundamentals, particularly from China, where prices on the Shanghai Futures
Exchange have surged in recent weeks. Reflecting this positive
pricing momentum, the Company has announced increases to its NBSK
pulp list price to China of
US$50 per tonne for January 2021 and a further US$120 per tonne for February 2021, to US$840 per tonne. It has also announced two
consecutive price increases to North
America of US$30 per tonne and
US$115 per tonne, for January and
February 2021, respectively, to
US$1,300 per tonne. Notwithstanding
the potential for higher pricing volatility in the coming months,
the Company currently projects the pricing environment to remain
favourable for pulp producers through the first half of
2021.
The Company's results in the first quarter of 2021 will reflect
the impact of the RB5 capital-related outage at Northwood into
mid-January (approximately 10,000 tonnes). With the RB5 rebuild now
completed and with much healthier fibre inventories, a key focus of
the Company's kraft pulp mills in 2021, including Northwood, will
be on improving operational reliability and closely managing
manufacturing and fibre costs.
No major maintenance outages are planned for the first quarter
of 2021; a maintenance outage is currently planned at the
Intercontinental NBSK pulp mill in the second quarter of 2021, with
a projected 12,000 tonnes of reduced NBSK pulp production. Smaller
maintenance outages are scheduled for the third quarter of 2021 at
the Prince George NBSK pulp mill and at the Taylor BCTMP mill with
a projected 5,000 tonnes of reduced NBSK pulp production and
projected 5,000 tonnes of reduced BCTMP production,
respectively.
Bleached kraft paper demand is currently anticipated to be
relatively stable in the first quarter of 2021 as COVID-19 led
demand for bleached kraft paper products is projected to continue
in the near-term, particularly for paper products that meet food
grade specifications. A maintenance outage is currently planned at
the Company's paper machine in the third quarter of 2021 with a
projected 5,000 tonnes of reduced paper production.
Commenting on the Company's 2020 and fourth quarter of 2020
results, CPPI's Chief Executive Officer, Don Kayne said, "We want to thank our employees
for their hard work, resilience and commitment to safety in what
was an unprecedented and challenging year as we worked together to
navigate the volatility and uncertainty associated with COVID-19.
While the financial results for 2020 and the quarter reflect the
challenging times, we preserved our strong cash position and ended
the year with a solid balance sheet. Looking ahead, we are very
focused on optimizing our production performance, reducing costs,
and maximizing fibre utilization in the coming months, as we work
to fully capitalize on the improving market conditions in
2021."
Refer to the Company's annual Management's Discussion and
Analysis for further discussion on the Company's results for the
fourth quarter of 2020 on page 17.
Additional Information and Conference Call
A conference call to discuss the fourth quarter's financial and
operating results will be held on Thursday,
February 25, 2021 at 8:00 AM Pacific
time. To participate in the call, please dial Toll-Free
1-888-390-0546. For instant replay access until March 11, 2021, please dial Toll-Free
1-888-390-0541 and enter participant pass code 854599#. The
conference call will be webcast live and will be available at
www.canfor.com. This news release, financial statements and a
presentation used during the conference call can be accessed via
the Company's website at
http://www.canfor.com/investor-relations/webcasts.
Non-IFRS Measures and Forward Looking Statements
Operating Income (Loss) before Amortization and Adjusted
Operating Income (Loss) are not generally accepted earnings
measures and should not be considered as an alternative to net
income (loss) or cash flows as determined in accordance with IFRS.
Refer to the Company's Annual Management's Discussion and Analysis
for a reconciliation of Operating Income (Loss) reported in
accordance with IFRS to Operating Income (Loss) before Amortization
and to Adjusted Operating Income (Loss).
Certain statements in this press release constitute
"forward-looking statements" which involve known and unknown risks,
uncertainties and other factors that may cause actual results to be
materially different from any future results, performance or
achievements expressed or implied by such statements. Words such as
"expects", "anticipates", "projects", "intends", "plans", "will",
"believes", "seeks", "estimates", "should", "may", "could", and
variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are
based on management's current expectations and beliefs and actual
events or results may differ materially. There are many factors
that could cause such actual events or results expressed or implied
by such forward-looking statements to differ materially from any
future results expressed or implied by such statements.
Forward-looking statements are based on current expectations and
the Company assumes no obligation to update such information to
reflect later events or developments, except as required by
law.
Canfor Pulp Products Inc. ("Canfor Pulp" or "CPPI") is a
leading global supplier of pulp and paper products with operations
in the central interior of British
Columbia ("BC") employing approximately 1,300 people
throughout the organization. Canfor Pulp owns and operates three
mills in Prince George, BC with a
total capacity of 1.1 million tonnes of Premium Reinforcing
Northern Bleached Softwood Kraft ("NBSK") Pulp and 140,000 tonnes
of kraft paper, as well as one mill in Taylor, BC with an annual production capacity
of 230,000 tonnes of Bleached Chemi-Thermo Mechanical Pulp
("BCTMP"). Canfor Pulp is the largest North American and one of the
largest global producers of market northern softwood kraft pulp.
CPPI shares are traded on the Toronto Stock Exchange under the
symbol CFX. For more information visit canfor.com.
SOURCE Canfor Pulp Products Inc.