VANCOUVER, BC, Oct. 27,
2022 /CNW/ - Canfor Pulp Products Inc. ("The Company"
or "CPPI") (TSX: CFX) today reported its third quarter of 2022
results:
Overview
- Q3 2022 reported operating income of $19
million; net income of $16
million, or $0.25 per
share
- Strong global pulp fundamentals principally led by supply
shortages; significant uptick in NBSK pulp unit sales
realizations
- Improved pulp production following capital-related downtime
earlier in the year
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)
|
|
2022
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
Sales
|
$
|
308.3
|
$
|
288.9
|
$
|
817.5
|
$
|
298.9
|
$
|
895.6
|
Reported operating
income before amortization
|
$
|
46.7
|
$
|
15.7
|
$
|
56.5
|
$
|
37.8
|
$
|
136.4
|
Reported operating
income (loss)
|
$
|
19.2
|
$
|
(8.1)
|
$
|
(14.9)
|
$
|
15.8
|
$
|
71.7
|
Adjusted operating
income before amortization1
|
$
|
45.6
|
$
|
16.2
|
$
|
54.8
|
$
|
41.3
|
$
|
137.7
|
Adjusted operating
income (loss)1
|
$
|
18.1
|
$
|
(7.6)
|
$
|
(16.6)
|
$
|
19.3
|
$
|
73.0
|
Net income
(loss)
|
$
|
16.3
|
$
|
(5.7)
|
$
|
(9.3)
|
$
|
12.1
|
$
|
56.7
|
Net income (loss) per
share, basic and diluted
|
$
|
0.25
|
$
|
(0.09)
|
$
|
(0.14)
|
$
|
0.19
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
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 operating income of $19.2 million for the third quarter of 2022, up
$27.3 million from an operating loss
of $8.1 million reported for the
second quarter of 2022, in large part reflecting materially higher
Northern Bleached Softwood Kraft ("NBSK") pulp unit sales
realizations, and to a lesser extent, a 2
cent, or 2%, weaker Canadian dollar.
Commenting on the Company's third quarter's results, CPPI's
President and Chief Executive Officer, Kevin Edgson, said, "This was a solid quarter
for Canfor Pulp, as we focused on enhancing our operational
performance and improving reliability while navigating persistent
supply chain and fibre-related challenges, in order to realize high
NBSK pulp list prices. While we will continue to actively monitor
the current external challenges facing our business, including the
fibre situation in British
Columbia, our immediate focus remains on optimizing
productivity while preserving our solid balance sheet."
Global softwood pulp market conditions remained relatively
strong through most of the third quarter of 2022, principally
reflecting increased demand, particularly from the North American
and European markets, coupled with supply shortages, tied to
ongoing global logistical challenges and unforeseen global
production disruptions. Market fundamentals came increasingly under
pressure in the latter part of the quarter however, driven largely
by a moderation in purchasing activity from China. Despite relatively steady global market
fundamentals, global softwood pulp producer inventories at the end
of August 2022 were well above the
balanced range at 44 days of supply, four days higher than at
the end of June 2022, largely tied to
the ongoing global supply chain challenges.
The strong NBSK US-dollar pulp list prices to China experienced in the first half of the
year, continued into the current quarter, with prices reaching a
near-record high of US$1,010 per
tonne in July, before declining in August and September, to end the
quarter at US$948 per tonne.
Consequently, average US-dollar NBSK pulp list prices to
China were US$969 per tonne, down US$39 per tonne, or 4%, from the previous
quarter. Prices to North America
continued to strengthen in the current quarter, averaging
US$1,800 per tonne (before
discounts), up US$57 per tonne, or
3%, from the previous quarter.
Following the completion of capital-related downtime in the
first half of 2022, pulp production was up 4% from the previous
quarter, as NBSK pulp productivity steadily improved as the quarter
progressed. Consistent with the prior period, however, NBSK pulp
production in the current quarter continued to be limited 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 and third quarters,
reduced production by approximately 60,000 tonnes in the current
period. In addition, NBSK pulp production in the current quarter
included the completion in mid-July of the Company's Northwood NBSK
pulp mill's ("Northwood") scheduled maintenance outage
(approximately 16,000 tonnes) as well as the commencement in
September of the Company's Intercontinental NBSK pulp mill's
("Intercon") planned maintenance downtime (approximately 6,000
tonnes in the third quarter and a further 6,000 tonnes in
October).
Operating income in the Company's paper segment was $4.1 million, down $2.1
million from the previous quarter, as moderately higher
US-dollar paper pricing and a weaker Canadian dollar were more than
offset by significantly higher slush pulp costs (linked to Canadian
dollar NBSK market pulp prices).
Looking forward, global softwood pulp markets are projected to
soften somewhat through the fourth quarter of 2022, reflecting
tempered pulp demand, particularly from China.
Results in the fourth quarter are anticipated to reflect the
continued uncertainties associated with lingering supply chain
challenges and the related pressures on the Company's operations
and shipments. As previously disclosed, 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's results in the fourth quarter of 2022 will see the
continuation of Intercon's scheduled maintenance outage into
October, with an estimated 6,000 tonnes of reduced NBSK pulp
production. In addition, NBSK pulp production in the fourth quarter
will reflect a temporary curtailment at Intercon due to a lack of
available economic fibre (approximately 16,000 tonnes). The current
weakness in lumber markets may result in extended sawmill
curtailments in the British Columbia Interior, with the risk that
lower volumes of sawmill residual chips available to pulp mills may
cause further downtime at the Company's operations. The Company
will continue to closely monitor the supply chain challenges as
well as the availability of economically viable fibre, and will
adjust future operating plans accordingly, through the balance of
2022.
Bleached kraft paper markets are projected to experience a
modest slowdown in the fourth quarter, particularly in the North
American and offshore markets, as global kraft paper inventory
levels move towards a more balanced range.
Additional Information and
Conference Call
A conference call to discuss the third quarter's financial and
operating results will be held on Friday,
October 28, 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 November 11, 2022, please dial Toll-Free
1-888-390-0541 and enter participant pass code 601480#. 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:
|
|
Q3
|
|
Q2
|
|
YTD
|
|
Q3
|
|
YTD
|
(millions of Canadian
dollars)
|
|
2022
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
Reported operating
income (loss)
|
$
|
19.2
|
$
|
(8.1)
|
$
|
(14.9)
|
$
|
15.8
|
$
|
71.7
|
Inventory write-down (recovery), net
|
$
|
(1.1)
|
$
|
0.5
|
$
|
(1.7)
|
$
|
3.5
|
$
|
1.3
|
Adjusted operating
income (loss)
|
$
|
18.1
|
$
|
(7.6)
|
$
|
(16.6)
|
$
|
19.3
|
$
|
73.0
|
Amortization
|
$
|
27.5
|
$
|
23.8
|
$
|
71.4
|
$
|
22.0
|
$
|
64.7
|
Adjusted operating
income before amortization
|
$
|
45.6
|
$
|
16.2
|
$
|
54.8
|
$
|
41.3
|
$
|
137.7
|
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.