VANCOUVER, BC, Oct. 26, 2021 /CNW/ - Canfor Pulp Products Inc.
("The Company" or "CPPI") (TSX: CFX) today reported its third
quarter 2021 results:
Overview
- Q3 2021 reported operating income of $16
million
- Net income of $12 million, or
$0.19 per share
- Available liquidity of $153
million at September 30,
2021
Financial Results
The following table summarizes selected financial information
for CPPI for the comparative periods:
|
|
Q3
|
|
Q2
|
|
YTD
|
|
Q3
|
|
YTD
|
(millions of Canadian
dollars, except per share amounts)
|
|
2021
|
|
2021
|
|
2021
|
|
2020
|
|
2020
|
Sales
|
$
|
298.9
|
$
|
334.3
|
$
|
895.6
|
$
|
226.4
|
$
|
752.7
|
Reported operating
income (loss) before amortization
|
$
|
37.8
|
$
|
72.9
|
$
|
136.4
|
$
|
(8.7)
|
$
|
32.3
|
Reported operating
income (loss)
|
$
|
15.8
|
$
|
51.0
|
$
|
71.7
|
$
|
(27.6)
|
$
|
(27.8)
|
Adjusted operating
income (loss) before amortization1
|
$
|
41.3
|
$
|
72.9
|
$
|
137.7
|
$
|
(11.7)
|
$
|
26.8
|
Adjusted operating
income (loss)1
|
$
|
19.3
|
$
|
51.0
|
$
|
73.0
|
$
|
(30.6)
|
$
|
(33.3)
|
Net income
(loss)
|
$
|
12.1
|
$
|
36.2
|
$
|
56.7
|
$
|
(18.1)
|
$
|
(12.2)
|
Net income (loss) per
share, basic and diluted
|
$
|
0.19
|
$
|
0.55
|
$
|
0.87
|
$
|
(0.28)
|
$
|
(0.19)
|
1 Adjusted for inventory write-downs
and recoveries ($3.5 million write-down in Q3 2021, $1.3 million
net write-down in YTD 2021, $3.0 million recovery in Q3 2020,
$5.5 million net recovery in YTD 2020).
|
The Company reported operating income of $15.8 million for the third quarter of 2021, down
$35.2 million from operating income
of $51.0 million reported for the
second quarter of 2021, as a modest uplift in Northern Bleached
Softwood Kraft ("NBSK") pulp unit sales realizations was more than
offset by a 15% decline in pulp production and shipments
quarter-over-quarter.
Commenting on the Company's third quarter results, CPPI's Chief
Executive Officer, Don Kayne said,
"Canfor Pulp reported solid financial results for the quarter
despite the growing pressures on global pulp market fundamentals,
lower production volumes, which reflected our previously announced
scheduled and unscheduled downtime, as well as significant supply
chain challenges. With our scheduled maintenance shutdowns for this
year behind us, we are focused on increasing our productivity going
forward."
Following the strong global pulp market conditions experienced
in the first half of the year, market fundamentals came under
modest pressure in the current quarter, as a decline in demand and
purchasing activity from the near-record highs seen in the previous
quarter, particularly from Asian markets, was combined with growing
global transportation challenges. Global softwood pulp producer
levels ended August at 46 days of supply, six days higher than at
the end of June, and significantly above the balanced range. As a
result, average US-dollar NBSK pulp list prices to China for the current quarter were
US$832 per tonne, down US$130 per tonne, or 14%, from the previous
quarter. Prices to other global regions remained strong in the
current period, with the average US-dollar NBSK pulp list price to
North America at US$1,542 per tonne (before discounts), down
US$56 per tonne, or 4%, from the
near-record highs seen in comparative period.
Notwithstanding the declines in NBSK pulp list prices, the
Company's NBSK pulp unit sales realizations experienced a modest
increase quarter-over-quarter, primarily due to a delay in
shipments (versus orders) from the ongoing global container
shortages and logistic challenges, and, to a lesser extent, a
2 cent, or 2%, weaker Canadian
dollar. The downward trend in demand and US-dollar prices for
Bleached Chemi-Thermo Mechanical Pulp ("BCTMP"), particularly from
the printing and writing segment, that commenced in the second
quarter continued through the current period, giving rise to a
significant decline in the Company's BCTMP unit sales realizations
quarter-over-quarter.
Pulp production was 247,000 tonnes for the third quarter of
2021, down 43,000 tonnes, or 15%, from the previous quarter,
primarily reflecting the quarter-over-quarter impact of scheduled
and unscheduled downtime. In the current quarter, decreased
operating days largely reflected scheduled maintenance outages at
the Company's Prince George NBSK pulp and Taylor BCTMP ("Taylor")
mills, as well as incremental downtime at its Northwood NBSK pulp
("Northwood") and Taylor mills
reflecting both weather-related rail disruptions and related pulp
mill inventory capacity constraints and, in the case of Northwood,
digester-related operational upsets in July. Combined, decreased
operating days in the current period reduced NBSK pulp production
by approximately 30,000 tonnes and BCTMP production by 12,000
tonnes. In addition, current quarter pulp production reflected
various smaller operational upsets through the quarter
(approximately 15,000 tonnes). In the second quarter of 2021, the
Company's pulp production was impacted by the completion of a
scheduled maintenance outage at the Company's Intercontinental NBSK
pulp mill (approximately 15,000 tonnes).
Pulp shipments were down 44,000 tonnes, or 15%, from the
previous quarter, mainly due to the aforementioned decrease in pulp
production quarter-over-quarter, combined with a build in pulp
inventories, driven by the persistent impacts of a constrained
logistics network, due to both wildfire-related rail disruptions in
British Columbia in July as well
as global container shortages and port congestion.
Pulp unit manufacturing costs were significantly higher than the
prior quarter principally reflecting increased fibre costs and
reduced production in the current quarter. The higher fibre costs
were primarily due to increased market prices for sawmill delivered
residual chips (linked to Canadian dollar NBSK pulp sales
realizations) combined with a larger proportion of higher-cost
whole log chips as a result of sawmill curtailments in the current
quarter.
The Company's paper segment reported an operating loss of
$2.5 million, down $3.4 million from the operating income of
$0.9 million for the previous
quarter, as increased slush pulp costs, linked to higher Canadian
dollar NBSK pulp market prices, and reduced paper production, as a
result of scheduled maintenance downtime, more than offset improved
paper unit sales realizations and a weaker Canadian dollar.
Looking forward, global softwood kraft pulp markets are
anticipated to be more challenging through the fourth quarter of
2021, as above-average global pulp inventory levels and a heavily
congested global supply chain network are projected to combine with
softening Chinese demand. The latter, largely tied to the energy
constraints on the industrial segment in that region. Weakness
experienced in the high yield BCTMP market, especially in
Asia, through the third quarter is
anticipated to continue through the balance of the year.
Bleached kraft paper demand in North
America is currently anticipated to strengthen through the
fourth quarter of 2021, driven by both tight supply and increased
demand. Offshore bleached kraft paper markets are also anticipated
to be strong over the same period.
Additional Information and Conference Call
A conference call to discuss the third quarter's
financial and operating results will be held on Wednesday, October 27, 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 November 10, 2021, please dial
Toll-Free 1-888-390-0541 and enter participant pass code 562242#.
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 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 one of the largest North American and
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.