VANCOUVER, BC, July 29, 2021 /CNW/ - Canfor Pulp Products Inc.
("The Company" or "CPPI") (TSX: CFX) today reported second quarter
2021 results:
Overview
- Q2 2021 operating income of $51
million
- Net income of $36.2 million, or
$0.55 per share
- Net debt of $14 million and net
debt to capitalization of 2.3% at June 30,
2021
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)
|
|
2021
|
|
2021
|
|
2021
|
|
2020
|
|
2020
|
Sales
|
$
|
334.3
|
$
|
262.4
|
$
|
596.7
|
$
|
250.7
|
$
|
526.3
|
Reported operating
income before amortization
|
$
|
72.9
|
$
|
25.7
|
$
|
98.6
|
$
|
13.3
|
$
|
41.0
|
Reported operating
income (loss)
|
$
|
51.0
|
$
|
4.9
|
$
|
55.9
|
$
|
(6.3)
|
$
|
(0.2)
|
Adjusted operating
income before amortization1
|
$
|
72.9
|
$
|
23.5
|
$
|
96.4
|
$
|
21.5
|
$
|
38.5
|
Adjusted operating
income (loss)1
|
$
|
51.0
|
$
|
2.7
|
$
|
53.7
|
$
|
1.9
|
$
|
(2.7)
|
Net income
(loss)
|
$
|
36.2
|
$
|
8.4
|
$
|
44.6
|
$
|
(1.1)
|
$
|
5.9
|
Net income (loss) per
share, basic and diluted
|
$
|
0.55
|
$
|
0.13
|
$
|
0.68
|
$
|
(0.02)
|
$
|
0.09
|
1 Adjusted
for inventory write-downs and recoveries ($2.2 million recovery in
Q1 2021 and YTD 2021, $8.2 million write-down in Q2 2020, $2.5
million net recovery in YTD 2020).
|
The Company reported operating income of $51.0 million for the second quarter of 2021, up
$46.1 million from the operating
income of $4.9 million reported for
the first quarter of 2021, in large part reflecting materially
higher Northern Bleached Softwood Kraft ("NBSK") pulp unit sales
realizations, and to a lesser extent, an 8% increase in shipments
following transportation disruptions experienced in the first
quarter of 2021. These factors more than offset the impact of a 3%
stronger Canadian dollar and market-related fibre cost increases in
the current quarter.
Commenting on the Company's second quarter results, CPPI's Chief
Executive Officer, Don Kayne said,
"We are encouraged by our improved operational and financial
performance in the second quarter, which enabled us to capitalize
on the favourable pulp market prices."
Following the sharp improvement in market fundamentals earlier
in the year, global pulp market conditions were more stable in the
second quarter. Demand was solid through the first part of the
current quarter but a moderation in purchasing activity from
China saw some downward pressure
on prices in that region, particularly in June.
The upward trend in NBSK US-dollar pulp list prices to
China from the first quarter
continued in April, with prices reaching a near-record high of
US$995 per tonne in April, before
declining in May and June, to end the quarter at US$910 per tonne. As a result, the current
quarter US-dollar NBSK pulp list price to China averaged US$962 per tonne, up US$79 per tonne, or 9%, compared to the previous
quarter. Prices to North America
(before discounts) saw sharp increases in the current quarter,
largely in response to the uplift in China prices earlier in the year, up
US$296 per tonne, or 23%, from the
previous quarter, to US$1,598 per
tonne.
As a result of the higher prices as well as a favourable timing
lag in shipments (versus orders), NBSK pulp unit sales realizations
recorded a substantial increase in the current quarter, which
significantly outweighed the stronger Canadian dollar. Average
Bleached Chemi-Thermo Mechanical Pulp ("BCTMP") unit sales
realizations showed more modest gains from the previous quarter, as
positive trends in BCTMP US-dollar pricing early in the quarter
more than offset the effects of a sharp decline in demand and
prices as the quarter progressed, particularly for the printing and
writing segment.
Pulp production was 290,000 tonnes for the second quarter of
2021, broadly in line with the previous quarter, principally
reflecting improved operating rates at the Company's Northwood
("Northwood") and Prince George
("Prince George") NBSK pulp mills throughout much of the current
quarter, largely offsetting a decrease in operating days associated
with the completion of a scheduled maintenance outage at the
Company's Intercontinental NBSK pulp mill (approximately 15,000
tonnes).
Pulp shipments were up 20,000 tonnes, or 8%, from the previous
quarter, mainly due to the uptick in global pulp demand early in
the current quarter, combined with increased vessel shipments in
the current period, as global transportation challenges experienced
in early 2021 eased somewhat in April and May 2021, before coming under pressure again in
June.
Pulp unit manufacturing costs saw a slight increase compared to
the previous quarter as increased fibre costs more than offset the
benefits of higher production and seasonally lower energy prices
and usage in the current quarter. The higher fibre costs reflected
increased market prices for delivered sawmill residual chips
(linked to Canadian dollar NBSK pulp sales realizations) combined
with a seasonal improvement in chip quality, offset by a lower
proportion of higher-cost whole log chips in the period.
Operating income in the Company's paper segment was $0.9 million, down $3.3
million from the previous quarter, as increased slush pulp
costs linked to higher Canadian dollar NBSK market pulp prices more
than offset improved paper unit sales realizations.
Looking forward, global softwood kraft pulp markets are
projected to soften somewhat through the third quarter of 2021,
driven by the current tepid Chinese demand and above-average global
pulp inventory levels combined with the traditionally slower summer
months. Weakness experienced in the high yield BCTMP markets,
especially in Asia, late in the
second quarter is anticipated to continue early into the third
quarter of 2021, before a projected stabilization in prices through
the balance of the period.
The recent wave of extreme heat across Western Canada has put further pressure on an
already constrained global logistics network. As a result, early in
the third quarter of 2021, the Company has experienced limited and
intermittent rail service to and from its pulp mills. While the
Company continues to monitor and adapt to the unfolding logistic
situation, it anticipates that these transportation disruptions
will result in lower projected shipment volumes for the third
quarter of 2021.
Results in the third quarter of 2021 will also reflect the
impact of scheduled maintenance outages at the Company's
Prince George and Taylor BCTMP
("Taylor") pulp mills, as well as incremental downtime at Northwood
and Taylor reflecting both the
aforementioned weather-related rail disruptions and pulp mill
inventories nearing capacity as well as, in the case of Northwood,
digester-related operational upsets in July. Combined, the
currently anticipated third quarter downtime is projected to reduce
NBSK pulp production by approximately 30,000 tonnes and BCTMP
production by an estimated 12,000 tonnes.
Bleached kraft paper demand in North
America is currently anticipated to show continued strength
through the third quarter of 2021, largely driven by ongoing tight
supply in the region. Offshore bleached kraft paper markets are
also anticipated to be strong over the same period. A maintenance
outage is currently planned at the Company's Prince George paper machine in September 2021 with a projected 5,000 tonnes of
reduced paper production.
Commenting on the Company's outlook for the third quarter,
CPPI's Chief Executive Officer, Don
Kayne said, "The summer heat and wildfire conditions are
impacting our pulp business, and we continue to actively monitor
the ongoing weather-related situation, particularly with regards to
transportation, while ensuring the health and safety of our
employees which remains our top priority."
Additional Information and Conference Call
A conference call to discuss the second quarter's financial and
operating results will be held on Friday,
July 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 August 13, 2021, please dial Toll-Free
1-888-390-0541 and enter participant pass code 447785#. 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
Canfor 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 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.