CANFOR PULP PRODUCTS INC. 
- 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
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
Commenting on the Company's third quarter's results, CPPI's President and Chief Executive Officer,
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
The strong NBSK US-dollar pulp list prices to
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
Looking forward, global softwood pulp markets are projected to soften somewhat through the fourth quarter of 2022, reflecting tempered pulp demand, particularly from
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
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.
A conference call to discuss the third quarter's financial and operating results will be held on
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 |
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.
SOURCE
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