VANCOUVER, BC, April 29, 2021 /CNW/ - Canfor Pulp Products Inc.
("The Company" or "CPPI") (TSX: CFX) today reported first quarter
2021 results:
Overview
- First quarter of 2021 reported operating income of $4.9 million
- Net income of $8.4 million, or
$0.13 per share
- Net debt of $60 million and net
debt to capitalization of 9.9% at March 31,
2021
Financial Results
The following table summarizes selected financial information
for CPPI for the comparative periods:
|
|
|
|
|
|
|
|
Q1
|
|
Q4
|
|
Q1
|
(millions of Canadian
dollars, except per share amounts)
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2020
|
Sales
|
|
$
|
|
262.4
|
$
|
237.8
|
$
|
275.6
|
Reported operating
income (loss) before amortization
|
|
$
|
|
25.7
|
$
|
(6.2)
|
$
|
27.7
|
Reported operating
income (loss)
|
|
$
|
|
4.9
|
$
|
(28.3)
|
$
|
6.1
|
Adjusted operating
income (loss) before amortization1
|
|
$
|
|
23.5
|
$
|
(9.2)
|
$
|
17.0
|
Adjusted operating
income (loss) 1
|
|
$
|
|
2.7
|
$
|
(31.3)
|
$
|
(4.6)
|
Net income
(loss)
|
|
$
|
|
8.4
|
$
|
(10.2)
|
$
|
7.0
|
Net income (loss) per
share, basic and diluted
|
|
$
|
|
0.13
|
$
|
(0.16)
|
$
|
0.11
|
1 Adjusted for inventory write-down
recoveries ($2.2 million recovery in Q1 2021; $3.0 million recovery
in Q4 2020; $10.7 million recovery in Q1 2020).
|
The Company reported operating income of $4.9 million for the first quarter of 2021, an
improvement of $33.2 million from the
reported operating loss of $28.3
million for the fourth quarter of 2020, reflecting improving
global pulp market conditions, combined with a 25% increase in pulp
production quarter-over-quarter.
During the first quarter of 2021, global pulp markets
experienced a surge in US-dollar list prices in response to an
uptick in demand, particularly from China, combined with ongoing global logistic
constraints and supported by strong price increases on the Shanghai
Futures Exchange. As a result, Northern Bleached Softwood Kraft
("NBSK") pulp list prices on orders from China saw sharp increases throughout the
period, reaching a high of US$973 per
tonne in March to average US$883 per
tonne for the current quarter, up US$246 per tonne, or 39%, from the previous
quarter. Prices to North America
also saw sharp increases, although not at the same levels as those
in China, up US$164 per tonne, or 14%, quarter-over-quarter to
US$1,302 per tonne (before
discounts). Reflecting the lag between orders and shipments, the
significant majority of these price gains will be realized in the
second quarter.
NBSK pulp unit sales realizations reflected improved prices on
shipments in the current period, which more than offset a
2 cent, or 3%, stronger Canadian
dollar. Average Bleached Chemi-Thermo Mechanical Pulp ("BCTMP")
unit sales realizations were broadly in line with the previous
quarter as more modest upward positive trends in BCTMP US-dollar
pricing were largely offset by the stronger Canadian dollar.
Energy revenues increased in the current quarter reflecting a
return to more normalized power generation levels combined with
seasonally higher energy prices.
Pulp production was 292,000 tonnes for the current quarter, up
59,000 tonnes, or 25%, from the previous quarter, principally
reflecting the benefit of increased operating days following the
completion in mid-January of the Company's Northwood NBSK pulp
mill's ("Northwood") recovery boiler number five ("RB5")
capital-related downtime, offset in part by several operational
issues experienced at the Company's Prince George NBSK pulp mill in
the current period.
Pulp shipments were up 7,000 tonnes, or 3%, from the previous
quarter, largely due to the aforementioned increase in pulp
production quarter-over-quarter, offset in part by the
replenishment of inventory levels significantly drawn down during
the fourth quarter of 2020 due to the Northwood outage. Global
transportation constraints also impacted shipment volumes through
the current period.
Pulp unit manufacturing costs were moderately lower than the
prior quarter as the benefit of increased production in the current
quarter was offset in part by seasonally higher energy prices and,
to a lesser extent, planned maintenance spend. Fibre costs were
broadly in line with the previous period as higher market-based
prices for sawmill residual chips offset seasonal pricing
adjustments.
Operating income in the Company's paper segment was $4.2 million, down $0.6
million from the previous quarter as a modest uptick in
US-dollar pricing and an increase in paper shipments were more than
offset by the stronger Canadian dollar and higher paper unit
manufacturing costs in the current quarter, resulting from
increases in slush pulp costs (linked to higher Canadian dollar
NBSK market pulp prices).
Global softwood kraft pulp markets are projected to remain well
positioned through the second quarter of 2021, driven by both
continued solid demand and tight supply arising from the current
global supply chain challenges, as well as the traditional spring
maintenance period. Reflecting this ongoing positive momentum, the
Company announced increases to its NBSK pulp list prices to
China and North America for April
2021 to US$1,010 per tonne and
US$1,565 per tonne, respectively.
High yield markets are anticipated to see continued improvement
through the second quarter of 2021, largely driven by strong demand
for board products, especially in Asia, tempered somewhat by available
supply.
Results in the second quarter of 2021 are anticipated to reflect
the record-high pricing as well as a scheduled maintenance outage
at the Company's Intercontinental NBSK pulp mill, with a projected
14,000 tonnes of reduced NBSK pulp production, combined with higher
associated maintenance costs and lower projected shipment
volume.
Bleached kraft paper demand is currently anticipated to show
continued strength through the second quarter of 2021 and stabilize
through the balance of 2021.
Commenting on the Company's first quarter's results, CPPI's
Chief Executive Officer, Don Kayne,
said, "For over a year our employees have faced the challenges of
the COVID-19 pandemic by staying focused on their commitment to
safety and producing high quality products for our global
customers. We thank them for their hard work and dedication. With
the Northwood pulp mill recovering well after its RB5
capital-upgrade, we are focused on fully capitalizing on the
current strong pulp market conditions."
Additional Information and Conference Call
A
conference call to discuss the first quarter's financial and
operating results will be held on Friday,
April 30, 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 May 14, 2021, please dial Toll-Free
1-888-390-0541 and enter participant pass code 772487#. The
conference call will be webcast live and will be available at
www.canfor.com. This news release, the attached 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 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 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. Canfor Pulp is the largest
North American, and one of the largest global producers of market
NBSK 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.