Financial Reports & Markets
Canfor reports pulp shipments down in Q3
By P&PC Staff
By P&PC Staff
October 25, 2018 – Canfor Corporation has released its third-quarter 2018 results, reporting pulp shipments and production are down over the previous quarter as a result of scheduled downtime and weather-related transportation issues.
Pulp shipments were down 66,200 tonnes, or 20 per cent, from the previous quarter, reflecting the combination of a drawdown of inventory in the previous quarter as weather-related transportation constraints eased, a 10,000 tonne vessel slippage into October, the impact of early fall maintenance and softer market demand from China in the first part of the quarter.
Pulp production was down 11,200 tonnes, or four per cent, from the previous quarter for the most part reflecting scheduled maintenance downtime at CPPI’s Northwood Northern bleached softwood kraft (NBSK) pulp mill in late September (spanning quarter-end), which more than offset increased bleached chemithermomechanical pulp (BCTMP) production, following the commissioning of CPPI’s energy reduction project at its Taylor Pulp mill at the end of June. As previously announced, towards the end of the third quarter, Northwood extended its scheduled maintenance outage on one production line.
The outage is to enable necessary tube replacements to its No. 5 recovery boiler to rectify damage discovered during routine preventative maintenance inspections. This unscheduled outage is anticipated to result in an additional reduction in NBSK pulp production in the fourth quarter of 60,000-70,000 tonnes. Pulp unit manufacturing costs were modestly higher than the previous quarter, principally reflecting market-related increases in sawmill and whole log residual chip costs, and an increased proportion of higher-cost whole log chips.
Otherwise, Canfor reports a solid third quarter with adjusted operating income of $244 million and sales of $1.32 billion.
The company’s adjusted net income is $157 million, or $1.23 per share, with net cash of $198 million, or 8.8 per cent net cash to total capitalization. Operating income was $201.8 million for the third quarter of 2018, down $80.3 million from the reported operating income of $282.1 million for the second quarter of 2018, with the decline reflecting lower operating earnings in both the lumber and pulp and paper segments.
Reported results for the third quarter of 2018 included a net duty expense of $42.6 million, at a current effective countervailing duty (CVD) and anti-dumping duty (ADD) rate of 14.94 per cent, compared to $51.7 million reported in the second quarter of 2018. After adjusting for duties, operating income was $244.4 million for the third quarter of 2018, down $89.4 million from similarly adjusted operating income in the second quarter of 2018.
Commenting on the company’s third quarter results, Don Kayne, president and CEO of Canfor, says, “Canfor Pulp recorded another financially solid quarter despite significant scheduled maintenance downtime at Northwood, ramp-up efforts at Taylor and several operational challenges. We are very focused on completing our repairs to our No.5 recovery boiler at Northwood and returning to full operating capacity later this quarter.”
Read the full report here.