Canfor Pulp Products Inc. reported net income of $18.8 million for the second quarter of 2014, compared to $25.7 million for the first quarter of 2014 and $7.6 million for the second quarter of 2013.
The company reported operating income of $29.6 million for the second quarter of 2014, a decrease of $6.8 million from operating income of $36.4 million for the first quarter of 2014, as the impact of pulp and paper maintenance outages and higher fibre costs more than offset higher pulp and paper shipments.
Commenting on the second quarter's results, CPPI's CEO, Don Kayne, said, “Market conditions were better than anticipated, allowing us to generate solid financial performance this quarter. With our largest maintenance outages behind us, we will be focused on optimizing our production performance and sales mix through the balance of the year."
Despite slight increases in the average NBSK pulp prices to North America and Europe, Canfor reports that pulp unit sales realizations experienced a small decrease compared to the previous quarter due to a combination of weaker prices to China, a slightly stronger Canadian dollar and a higher proportion of shipments to lower-margin markets, including Asia, mostly tied to constraints in the previous quarter due to the Vancouver Port truckers' strike.
The company says global softwood pulp markets were steady through the second quarter of 2014. The North American NBSK pulp list price was stable over the quarter averaging US$1,030 per tonne, up US$13 per tonne, or 1%, compared to the first quarter of 2014. The NBSK pulp list price to Europe also remained largely unchanged, averaging US$925 per tonne, up US$5 per tonne from the previous quarter, while the average NBSK pulp list price to China was down US$27 per tonne, or 4%, to US$730 per tonne.
Canfor’s pulp shipments were up 11% from the previous quarter, largely attributable to improved transportation performance following the challenges experienced in the prior quarter. Pulp production levels were down 8% from the previous quarter principally related to the maintenance outages at the Intercontinental and Prince George Pulp Mills, which reduced market pulp production by 18,000 tonnes.
Pulp unit manufacturing costs were up moderately compared to the previous quarter, mostly due to the maintenance outages and increased fibre costs, partially offset by seasonally lower energy costs, the company explains. The higher unit fibre costs reflected higher delivered sawmill residual and whole log chip costs and seasonal factors.