Financial Reports & Markets
Fortress Global Enterprises reports improved dissolving pulp production in Q3
By P&PC Staff
By P&PC Staff
November 7, 2018 – Fortress Global Enterprises has reported its third-quarter results for 2018, with operating EBITDA from continuing operations of $7.5 million compared to operating EBITDA from continuing operations of $2.7 million in the previous quarter and operating EBITDA loss from continuing operations of $1.6 million in the prior-year comparative period.
Fortress Global Enterprises operates its dissolving pulp business at the Fortress Specialty Cellulose mill located in Canada, which also operates in the renewable energy generation sector through its cogeneration facility.
The dissolving pulp segment generated operating EBITDA of $9 million and the bioproducts segment generated operating EBITDA loss of $0.4 million. Corporate costs were $1.1 million in the third quarter of 2018.
“This quarter saw significant operational progress with improving production throughout the quarter. Debottlenecking in the evaporator/concentrator section of the mill proved successful and has shown indicative signs that the mill’s operations have more room for improvement,” says Chadwick Wasilenkoff, CEO of Fortress Global Enterprises. “We received the fifth digester operating permit and expect the digester to have a positive impact on the fourth quarter operations. The fourth quarter shut was successfully completed on schedule with the previously announced 50 per cent reduction in downtime and slightly under budget.”
The dissolving pulp segment generated operating EBITDA of $9 million for the quarter ended September 30, 2018, which is the second best historical quarter at the FSC mill. Operating EBITDA was $4.2 million for the quarter ended June 30, 2018 and operating EBITDA loss was $0.5 million for the prior year comparative period. Following the unplanned shuts in July, the mill experienced much improved operations in August and September. Production volumes in the third quarter of 2018 increased approximately six per cent compared to the second quarter of 2018 and 41 per cent compared to the prior-year period. The prior-year production was impacted by operational challenges due to the auxiliary system failure at the FSC mill.
A total of 40,619 air dried metric tonnes (ADMT) of dissolving pulp were produced in the third quarter of 2018 and the FSC mill sold 38,433 ADMT of dissolving pulp in the same period, compared to sales of 38,266 ADMT and 32,048 ADMT of dissolving pulp in the previous quarter and prior-year comparative period, respectively.
In the third quarter of 2018, the FSC mill’s production costs, including amortization of some of the planned shutdown costs and the positive impact of the cogeneration facility, were improved by 13 per cent compared to the second quarter of 2018 and improved by 18 per cent relative to the prior-year comparative period due primarily to productivity gains and lower variable costs. As a reminder, management stopped reporting cost per tonne in the first quarter of this year due to competitive reasons.
Dissolving pulp prices in 2018 have been relatively stable through 2018 maintaining favorable increases relative to the prior year. Prices have ranged from approximately $1,206 (US$920) to $1,237 (US$944) per tonne. Currently the price is $1,237 (US$944) per tonne, which is US$14 higher year over year based on quoted US$ pricing. Typical market cycle peak occurs in the fall, coinciding with downstream textile and viscose staple fibre (VSF) market cycles. Dissolving pulp prices are likely also being supported by favorable paper pulp market pricing, which influences swing mill production towards paper pulp, and increases in Chinese VSF output.
Read the full report here.