VANCOUVER, BC, April 29, 2021 - Canfor Pulp Products Inc. ("The Company" or "CPPI") (TSX: CFX) today reported first quarter 2021 results:
- First quarter of 2021 reported operating income of $4.9 million
- Net income of $8.4 million, or $0.13 per share
- Net debt of $60 million and net debt to capitalization of 9.9% at March 31, 2021
The following table summarizes selected financial information for CPPI for the comparative periods:
The Company reported operating income of $4.9 million for the first quarter of 2021, an improvement of $33.2 million from the reported operating loss of $28.3 million for the fourth quarter of 2020, reflecting improving global pulp market conditions, combined with a 25% increase in pulp production quarter-over-quarter.
During the first quarter of 2021, global pulp markets experienced a surge in US-dollar list prices in response to an uptick in demand, particularly from China, combined with ongoing global logistic constraints and supported by strong price increases on the Shanghai Futures Exchange. As a result, Northern Bleached Softwood Kraft ("NBSK") pulp list prices on orders from China saw sharp increases throughout the period, reaching a high of US$973 per tonne in March to average US$883 per tonne for the current quarter, up US$246 per tonne, or 39%, from the previous quarter. Prices to North America also saw sharp increases, although not at the same levels as those in China, up US$164 per tonne, or 14%, quarter-over-quarter to US$1,302 per tonne (before discounts). Reflecting the lag between orders and shipments, the significant majority of these price gains will be realized in the second quarter.
NBSK pulp unit sales realizations reflected improved prices on shipments in the current period, which more than offset a 2 cent, or 3%, stronger Canadian dollar. Average Bleached Chemi-Thermo Mechanical Pulp ("BCTMP") unit sales realizations were broadly in line with the previous quarter as more modest upward positive trends in BCTMP US-dollar pricing were largely offset by the stronger Canadian dollar.
Energy revenues increased in the current quarter reflecting a return to more normalized power generation levels combined with seasonally higher energy prices.
Pulp production was 292,000 tonnes for the current quarter, up 59,000 tonnes, or 25%, from the previous quarter, principally reflecting the benefit of increased operating days following the completion in mid-January of the Company's Northwood NBSK pulp mill's ("Northwood") recovery boiler number five ("RB5") capital-related downtime, offset in part by several operational issues experienced at the Company's Prince George NBSK pulp mill in the current period.
Pulp shipments were up 7,000 tonnes, or 3%, from the previous quarter, largely due to the aforementioned increase in pulp production quarter-over-quarter, offset in part by the replenishment of inventory levels significantly drawn down during the fourth quarter of 2020 due to the Northwood outage. Global transportation constraints also impacted shipment volumes through the current period.
Pulp unit manufacturing costs were moderately lower than the prior quarter as the benefit of increased production in the current quarter was offset in part by seasonally higher energy prices and, to a lesser extent, planned maintenance spend. Fibre costs were broadly in line with the previous period as higher market-based prices for sawmill residual chips offset seasonal pricing adjustments.
Operating income in the Company's paper segment was $4.2 million, down $0.6 million from the previous quarter as a modest uptick in US-dollar pricing and an increase in paper shipments were more than offset by the stronger Canadian dollar and higher paper unit manufacturing costs in the current quarter, resulting from increases in slush pulp costs (linked to higher Canadian dollar NBSK market pulp prices).
Global softwood kraft pulp markets are projected to remain well positioned through the second quarter of 2021, driven by both continued solid demand and tight supply arising from the current global supply chain challenges, as well as the traditional spring maintenance period. Reflecting this ongoing positive momentum, the Company announced increases to its NBSK pulp list prices to China and North America for April 2021 to US$1,010 per tonne and US$1,565 per tonne, respectively. High yield markets are anticipated to see continued improvement through the second quarter of 2021, largely driven by strong demand for board products, especially in Asia, tempered somewhat by available supply.
Results in the second quarter of 2021 are anticipated to reflect the record-high pricing as well as a scheduled maintenance outage at the Company's Intercontinental NBSK pulp mill, with a projected 14,000 tonnes of reduced NBSK pulp production, combined with higher associated maintenance costs and lower projected shipment volume.
Bleached kraft paper demand is currently anticipated to show continued strength through the second quarter of 2021 and stabilize through the balance of 2021.
Commenting on the Company's first quarter's results, CPPI's Chief Executive Officer, Don Kayne, said, "For over a year our employees have faced the challenges of the COVID-19 pandemic by staying focused on their commitment to safety and producing high quality products for our global customers. We thank them for their hard work and dedication. With the Northwood pulp mill recovering well after its RB5 capital-upgrade, we are focused on fully capitalizing on the current strong pulp market conditions."
Additional Information and Conference Call
A conference call to discuss the first quarter's financial and operating results will be held on Friday, April 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 May 14, 2021, please dial Toll-Free 1-888-390-0541 and enter participant pass code 772487#. 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 https://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 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 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 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.