Financial Reports & Markets
Canfor Pulp Products reports record-high annual sales, but pulp production down in Q4
By P&PC Staff
By P&PC Staff
February 22, 2019 – Canfor Pulp Products Inc. has released its fourth-quarter 2019 and year-end results, citing a record high in annual sales by 15 per cent, but a decrease in pulp production and shipments over the last quarter.
The company also reported record-high operating income of $246.6 million, with net income of $2.83 per share and a return on invested capital of 37 per cent.
For the fourth quarter of 2018, Canfor Pulp says operating income was $15.6 million, a decrease of $44.9 million from $60.5 million reported for the third quarter of 2018. Results for the current quarter reflected repairs to one of the company’s Northwood Pulp Mill recovery boilers, and operational disruptions resulting from a third-party natural gas explosion in Prince George early in the quarter, combined with their respective effects on production volumes, shipments and manufacturing costs.
Reflecting weaker demand from China, global softwood pulp market demand was down in the fourth quarter of 2018, with global softwood pulp producer inventory levels remaining above normal through the quarter.
Pulp production was down 61,400 tonnes, or 22 per cent, from the previous quarter. This lower production primarily reflected the continuation of the scheduled maintenance outage at Northwood from the previous quarter, the aforementioned recovery boiler extended downtime at Northwood, as well as unscheduled downtime taken as a result of a third-party natural gas pipeline explosion, which impacted the company’s three NBSK pulp mills and, to a lesser extent, several other operational challenges during the current quarter.
Combined, these scheduled and unscheduled outages impacted NBSK pulp production by approximately 90,000 tonnes. In addition, in late December, Canfor Pulp curtailed production at its Taylor BCTMP mill for seven days in the face of reduced residual fibre availability resulting from various sawmill curtailments in the region, which impacted BCTMP production by approximately 5,000 tonnes. In the third quarter of 2018, a scheduled maintenance outage at Northwood and ramp up at Taylor following the commissioning of the energy reduction project, reduced pulp production by approximately 30,000 tonnes.
Pulp shipments were down 31,700 tonnes, or 12 per cent, from the previous quarter reflecting the impact of the aforementioned downtime partly offset by a drawdown of pulp inventories through the period. The anticipated benefit of a slipped vessel shipment from the previous quarter into the fourth quarter was offset by a delayed vessel shipment over the year end.
“With several months of significant operational challenges now behind us, we are very focused on getting our production performance back on track in the coming months,” says Don Kayne, CPPI’s chief executive officer.
Read the full Canfor Pulp Products financial report.