VANCOUVER, BC, Feb. 28,
2023 /CNW/ - Canfor Pulp Products Inc. ("The Company"
or "CPPI" or "Canfor Pulp") (TSX: CFX) today reported its 2022 and
fourth quarter of 2022 results1:
Overview
- 2022 adjusted operating loss of $59
million; adjusted net loss of $43
million, or $0.66 per
share
- Q4 2022 adjusted operating loss of $42
million; adjusted net loss of $34
million, or $0.52 per
share
- Q4 pulp production faced with fibre shortages and challenging
winter weather conditions
- After year end, announced permanent closure of pulp line at
Prince George Pulp and Paper Mill to right-size operating footprint
tied to long-term supply of economic residual fibre
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)
|
|
2022
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
Sales
|
$
|
268.1
|
$
|
308.3
|
$
|
1,085.6
|
$
|
249.3
|
$
|
1,144.9
|
Reported operating
income (loss) before amortization,
asset write-down and impairment
|
$
|
(15.1)
|
$
|
46.7
|
$
|
41.4
|
$
|
(19.6)
|
$
|
116.8
|
Reported operating
income (loss)
|
$
|
(91.1)
|
$
|
19.2
|
$
|
(106.0)
|
$
|
(137.2)
|
$
|
(65.5)
|
Adjusted operating
income (loss) before amortization,
asset write-down and impairment1
|
$
|
(15.6)
|
$
|
45.6
|
$
|
39.2
|
$
|
(18.5)
|
$
|
119.2
|
Adjusted operating
income (loss)1
|
$
|
(42.0)
|
$
|
18.1
|
$
|
(58.6)
|
$
|
(41.1)
|
$
|
31.9
|
Net income
(loss)
|
$
|
(69.8)
|
$
|
16.3
|
$
|
(79.1)
|
$
|
(101.1)
|
$
|
(44.4)
|
Net income (loss) per
share, basic and diluted
|
$
|
(1.07)
|
$
|
0.25
|
$
|
(1.21)
|
$
|
(1.55)
|
$
|
(0.68)
|
Adjusted net income
(loss)1
|
$
|
(33.6)
|
$
|
16.3
|
$
|
(42.9)
|
$
|
(31.7)
|
$
|
25.0
|
Adjusted net income
(loss) per share, basic and diluted1
|
$
|
(0.52)
|
$
|
0.25
|
$
|
(0.66)
|
$
|
(0.49)
|
$
|
0.38
|
|
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.
|
2022 was a difficult year for Canfor Pulp, as strong global pulp
market fundamentals and near-record high pulp list prices were more
than outweighed by the impact of global supply chain disruptions,
fibre shortages in British
Columbia ("BC") as well as operational efficiency and
reliability challenges at all of the Company's pulp mills.
Early in 2023, after an extensive analysis of its operating
footprint and the long-term supply of economic residual fibre,
Canfor Pulp made the decision to permanently close the pulp line at
its Prince George Pulp and Paper Mill ("PG"). As a result of this
decision, as well as the ongoing challenges to the business posed
by fibre availability and costs, the Company recorded an asset
write-down and impairment charge totaling $49.6 million in its results for the three and
twelve months ended December 31,
2022.
Before taking account of adjusting items, largely comprised of
the aforementioned asset-write down and impairment charge, the
Company's operating loss was $58.6
million for the current year, down $90.5 million from the adjusted operating income
of $31.9 million for the prior year.
The Company reported an operating loss for 2022 of $106.0 million, versus an operating loss of
$65.5 million for 2021.
For the fourth quarter of 2022, the Company reported an
operating loss of $91.1 million.
After taking account of adjusting items, the Company's operating
loss for the fourth quarter of 2022 was $42.0 million compared to an adjusted
operating income of $18.1 million for
the previous quarter. The loss in the current period principally
reflected the impact on pulp production of material reductions in
the Company's residual fibre supply, as well as challenging
operating conditions due to winter weather in BC.
Commenting on the Company's 2022 and fourth quarter of 2022
results, CPPI's President and Chief Executive Officer, Kevin Edgson, said, "This was a difficult
quarter to end a challenging year for Canfor Pulp. Our pulp
business faced many uncontrollable challenges this year, but
especially in the fourth quarter, including material fibre supply
disruptions as a result of sawmill curtailments. The decision to
shut down the pulp line at Prince George Pulp and Paper mill was
extremely difficult, but necessary, in order to right-size our
operating platform and set the Company up for a sustainable
long-term future. We are working to support our employees through
these transitions and regret the impact these decisions have on our
employees, their families and the local community. We want to
recognize our employees for their dedication and resilience as we
work through these significant changes in the organization."
Following the strong global pulp market conditions experienced
mid-year, market fundamentals came under modest pressure in the
current quarter, driven by a decline in demand and purchasing
activity, particularly from Asian markets, as well as an uptick in
global pulp market supply, primarily from Europe and South
America. These factors were combined with the sustained
effect of elevated global softwood pulp producer inventories which,
at the end of December 2022, remained
on the high end of the balanced range at 43 days of supply. As a
result, the current quarter US-dollar Northern Bleached Softwood
Kraft ("NBSK") pulp list prices to China averaged US$920 per tonne, down US$49 per tonne, or 5%, from the previous
quarter.
As mentioned, the current quarter was a challenging period for
the Company's pulp mills, with pulp production down 18% from the
previous quarter, as a shortage of economic fibre, combined with
challenging winter conditions in BC, significantly impacted
operating performance, particularly at the Company's
Intercontinental ("Intercon") and Northwood NBSK ("Northwood") pulp
mills. Pulp production in the current period also reflected ongoing
downtime at the Company's Taylor Bleached Chemi-Thermo Mechanical
Pulp ("BCTMP") mill ("Taylor"), which commenced in the first
quarter of 2022 and continued through the balance of the year. As a
result of a reduction in the long-term supply of fibre in the Peace
region, the Company does not see a path forward to restarting the
Taylor mill at this time and is exploring alternative uses for the
site.
Operating income in the Company's paper segment was $1.9 million, down $2.2
million from the operating income of $4.1 million in the previous quarter, as modestly
higher paper unit sales realizations, largely tied to the 4% weaker
Canadian dollar, were more than outweighed by a moderate uplift in
chemical costs and increased spend on operating supplies
quarter-over-quarter.
In recent weeks, global softwood kraft pulp market conditions
have experienced a modest uptick as unplanned global supply
outages, principally stemming from fibre-related downtime in
Western Canada, has more than
outweighed weak global macroeconomic conditions. Reflecting this
favourable momentum, the Company announced a US$30 per tonne increase to its NBSK pulp list
price to China in February 2023 to US$970 per tonne. Looking forward, global
softwood kraft pulp markets are projected to remain relatively
stable through the balance of the first quarter of 2023, as
persistent high global pulp inventory levels and additional
hardwood pulp capacity predicted to come online in 2023, combine
with steady Chinese demand. Notwithstanding the projected increased
supply, global pulp pricing is anticipated to remain above historic
average price levels in the short-term.
As a result of the recent announcement, the Company's results in
the first quarter of 2023 will reflect the impact on production and
shipments of the wind down the Company's pulp line at PG. Looking
forward, the Company is focused on optimizing a sustainable
operating footprint, improving operational reliability and closely
managing manufacturing and fibre costs.
No major maintenance outages are planned for the first and
second quarters of 2023. In the third quarter of 2023, a
maintenance outage is currently planned at Northwood, with a
projected 25,000 tonnes of reduced NBSK pulp production.
Bleached kraft paper markets are projected to weaken somewhat
through the first quarter of 2023, with a modest slowdown in demand
anticipated as global kraft paper inventories return to more
normalized levels. A maintenance outage is currently planned at the
Company's paper machine in the second quarter of 2023 with a
projected 5,000 tonnes of reduced paper production.
Refer to the Company's annual Management's Discussion and
Analysis for further discussion on the Company's results for the
fourth quarter of 2022 on page 18.
Additional Information and Conference Call
A conference call to discuss the fourth quarter's financial and
operating results will be held on Wednesday,
March 1, 2023 at 7:00 AM Pacific
time. To participate in the call, please dial Toll-Free
1-888-390-0546. For instant replay access until March 15, 2023, please dial Toll-Free
1-888-390-0541 and enter participant pass code 110844#. 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 Financial Measures
Throughout this press 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 consolidated financial statements:
|
|
Q4
|
|
Q3
|
|
YTD
|
|
Q4
|
|
YTD
|
(millions of Canadian
dollars)
|
|
2022
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
Reported operating
income (loss)
|
$
|
(91.1)
|
$
|
19.2
|
$
|
(106.0)
|
$
|
(137.2)
|
$
|
(65.5)
|
Asset write-down and
impairment
|
$
|
49.6
|
$
|
-
|
$
|
49.6
|
$
|
95.0
|
$
|
95.0
|
Inventory write-down
(recovery), net
|
$
|
(0.5)
|
$
|
(1.1)
|
$
|
(2.2)
|
$
|
1.1
|
$
|
2.4
|
Adjusted operating
income (loss)
|
$
|
(42.0)
|
$
|
18.1
|
$
|
(58.6)
|
$
|
(41.1)
|
$
|
31.9
|
Amortization
|
$
|
26.4
|
$
|
27.5
|
$
|
97.8
|
$
|
22.6
|
$
|
87.3
|
Adjusted operating
income (loss) before amortization,
asset write-down and impairment
|
$
|
(15.6)
|
$
|
45.6
|
$
|
39.2
|
$
|
(18.5)
|
$
|
119.2
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(69.8)
|
$
|
16.3
|
$
|
(79.1)
|
$
|
(101.1)
|
$
|
(44.4)
|
Asset write-down and
impairment, net of tax
|
$
|
36.2
|
$
|
-
|
$
|
36.2
|
$
|
69.4
|
$
|
69.4
|
Adjusted net income
(loss)
|
$
|
(33.6)
|
$
|
16.3
|
$
|
(42.9)
|
$
|
(31.7)
|
$
|
25.0
|
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.
About Canfor Pulp Products Inc.
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"). Canfor Pulp owns and operates three mills
in Prince George, BC with a total
capacity of 780,000 tonnes of Premium Reinforcing Northern Bleached
Softwood Kraft ("NBSK") Pulp and 140,000 tonnes of kraft paper.
CPPI shares are traded on the Toronto Stock Exchange under the
symbol CFX. For more information visit canfor.com.
SOURCE Canfor Pulp Products Inc.