VANCOUVER, BC, July 28,
2022 /CNW/ - Canfor Pulp Products Inc. ("The Company"
or "CPPI") (TSX: CFX) today reported its second quarter of 2022
results:
Overview
- Q2 2022 reported operating loss of $8
million; net loss of $6
million, or $0.09 per
share
- Strong global pulp fundamentals and near-record high global
US-dollar pulp list prices in Q2; significant improvement in NBSK
pulp unit sales realizations
- Increased pulp shipments reflecting slight transportation
relief despite ongoing logistics constraints
- Available liquidity of $106
million at June 30, 2022
Financial Results
The following table summarizes selected financial information
for CPPI for the comparative periods:
|
|
Q2
|
|
Q1
|
|
YTD
|
|
Q2
|
|
YTD
|
(millions of Canadian
dollars, except per share amounts)
|
|
2022
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
Sales
|
$
|
287.5
|
$
|
219.7
|
$
|
507.2
|
$
|
334.3
|
$
|
596.7
|
Reported operating
income (loss) before amortization
|
$
|
15.7
|
$
|
(5.9)
|
$
|
9.8
|
$
|
72.9
|
$
|
98.6
|
Reported operating
income (loss)
|
$
|
(8.1)
|
$
|
(26.0)
|
$
|
(34.1)
|
$
|
51.0
|
$
|
55.9
|
Adjusted operating
income (loss) before amortization1
|
$
|
16.2
|
$
|
(7.0)
|
$
|
9.2
|
$
|
72.9
|
$
|
96.4
|
Adjusted operating
income (loss)1
|
$
|
(7.6)
|
$
|
(27.1)
|
$
|
(34.7)
|
$
|
51.0
|
$
|
53.7
|
Net income
(loss)
|
$
|
(5.7)
|
$
|
(19.9)
|
$
|
(25.6)
|
$
|
36.2
|
$
|
44.6
|
Net income (loss) per
share, basic and diluted
|
$
|
(0.09)
|
$
|
(0.31)
|
$
|
(0.39)
|
$
|
0.55
|
$
|
0.68
|
|
1 Adjusted
results referenced throughout this news release are defined as
non-IFRS financial measures. For further details, refer to the
"Non-IFRS Financial Measures" section of this document
|
The Company reported an operating loss of $8.1 million for the second quarter of 2022,
compared to an operating loss of $26.0
million for the first quarter of 2022, in large part
reflecting materially higher Northern Bleached Softwood Kraft
("NBSK") pulp unit sales realizations, and to a lesser extent, a
16% uplift in pulp shipments, as transportation disruptions
globally and in British Columbia
("BC") eased somewhat in the latter part of the current quarter.
These factors more than offset the impact of market-related fibre
cost increases and inflation-driven cash conversion cost pressures
in the current period.
Pulp production was up 6% from the previous quarter, as NBSK
productivity in the current quarter was maximized to available
transportation. Concurrently, logistics-related downtime at the
Company's Taylor Bleached Chemi-Thermo Mechanical Pulp ("BCTMP")
mill ("Taylor"), which commenced in the first quarter of 2022 and
continued throughout the second quarter, reduced production by
approximately 60,000 tonnes. In addition, NBSK pulp production in
the current period included the completion in mid-April of the
Company's Northwood NBSK pulp mill's ("Northwood") recovery boiler
number one ("RB1") capital upgrade (approximately 10,000 tonnes) as
well as a scheduled maintenance outage at Northwood which commenced
in June and was completed mid-July (approximately 30,000 tonnes in
the second quarter and a further 16,000 tonnes in July).
Commenting on the Company's second quarter's results, CPPI's
President and Chief Executive Officer, Kevin Edgson, said, "This was an improved
quarter for Canfor Pulp, as we focused on optimizing our
operational performance under a constrained logistics situation.
Some relief in transportation networks towards the end of the
quarter, however, enhanced our ability to realize near-record high
NBSK pulp list prices. Throughout the quarter, CPPI's leadership
team has continued to make solid progress on the comprehensive
business review for the Company and will continue to advance these
efforts in the coming months. While we continue to actively monitor
the ongoing transportation situation in BC, our immediate focus
remains on getting our production performance back on track while
preserving our solid balance sheet."
Following the sharp improvement in global softwood pulp market
fundamentals earlier in the year, ongoing global logistics
constraints and unplanned global production outages, resulted in
strong global pulp market conditions throughout the second
quarter. The upward trend in NBSK US-dollar list prices on
orders to China experienced in the
first quarter, continued into April and held at near-record highs
throughout the balance of the period. As a result, the current
quarter US-dollar NBSK pulp list price to China averaged US$1,008 per tonne, up US$109 per tonne, or 12%, from the previous
quarter. Prices to North America
(before discounts) experienced more notable increases in the
current quarter, largely in response to the uplift in China prices earlier in the year, up
US$216 per tonne, or 14%, from the
previous quarter, to average US$1,743
per tonne. Global softwood pulp producer inventories at the end of
May 2022 were slightly above the
balanced range at 38 days of supply, an improvement of two days
from March 2022.
Operating income in the Company's paper segment was $6.2 million, up $0.2
million from the previous quarter, as moderately higher
paper unit sales realizations, tied to the continued strengthening
of global paper demand throughout much of the current quarter, was
combined with an increase in paper shipments and a weaker Canadian
dollar. These factors were offset, for the most part, by
significantly higher paper unit manufacturing costs, principally
driven by higher slush costs and increased spend on operating
supplies in the current period.
Looking forward, global softwood kraft pulp markets are
projected to remain solid through the third quarter of 2022,
reflecting both global pulp production and supply constraints, as
well as steady demand. High yield markets are forecast to see
slight improvements through the third quarter of 2022, also tied to
limited supply availability.
Notwithstanding the modest improvement in BC's transportation
networks seen in the later part of the second quarter, results in
the third quarter are anticipated to reflect the continued impact
of and uncertainties associated with a constrained rail service
network and the related pressures on the Company's operations and
shipments. Furthermore, it is projected that a restart of
Taylor will not be contemplated
until such time as there is a return to more normal transportation
service levels to all of the Company's pulp and paper mills. The
Company will continue to closely monitor the supply chain
challenges and will adjust future operating plans accordingly,
through the balance of 2022.
In addition, the Company's results in the third quarter of 2022
will reflect the impact of the continuation of Northwood's
scheduled maintenance outage into mid-July (approximately 16,000
tonnes), as well as a scheduled maintenance outage at the Company's
Intercontinental NBSK pulp mill in the latter part of the third
quarter and into the fourth quarter, with a projected 12,000 tonnes
of reduced NBSK pulp production.
Bleached kraft paper markets are projected to weaken somewhat
through the third quarter with a modest slowdown in demand
anticipated, especially in offshore markets, as global kraft paper
inventories return to more normalized levels.
Additional Information and
Conference Call
A conference call to discuss the second quarter's financial and
operating results will be held on Friday,
July 29, 2022 at 8:00 AM Pacific
time. To participate in the call, please dial Toll-Free
1-888-390-0546. For instant replay access until August 12, 2022, please dial Toll-Free
1-888-390-0541 and enter participant pass code 049770#. 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 Financial
Measures
Throughout this news release, reference is made to certain
non-IFRS financial measures which are used to evaluate the
Company's performance but are not generally accepted under IFRS and
may not be directly comparable with similarly titled measures used
by other companies. The following table provides a reconciliation
of these non-IFRS financial measures to figures reported in the
Company's condensed consolidated interim financial statements:
|
|
Q2
|
|
Q1
|
|
YTD
|
|
Q2
|
|
YTD
|
(millions of Canadian
dollars)
|
|
2022
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
Reported operating
income (loss)
|
$
|
(8.1)
|
$
|
(26.0)
|
$
|
(34.1)
|
$
|
51.0
|
$
|
55.9
|
Inventory write-down (recovery), net
|
$
|
0.5
|
$
|
(1.1)
|
$
|
(0.6)
|
$
|
-
|
$
|
(2.2)
|
Adjusted operating
income (loss)
|
$
|
(7.6)
|
$
|
(27.1)
|
$
|
(34.7)
|
$
|
51.0
|
$
|
53.7
|
Amortization
|
$
|
23.8
|
$
|
20.1
|
$
|
43.9
|
$
|
21.9
|
$
|
42.7
|
Adjusted operating
income (loss) before amortization
|
$
|
16.2
|
$
|
(7.0)
|
$
|
9.2
|
$
|
72.9
|
$
|
96.4
|
Forward Looking
Statements
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 is a leading global supplier of pulp and paper
products with operations in the central interior of 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 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.