Financial Reports & Markets
Resolute Forest Products shares fourth quarter and full year results for 2021
February 10, 2022 By P&PC Staff/Resolute Forest products
Resolute Forest Products recently shared its financial results for the fourth quarter and full year of 2021.
The company reported a net loss of $128 million, or $1.64 per share for the quarter ended December 31, compared to a net loss of $52 million, or $0.63 per share, in the same period in 2020.
Sales were $834 million in the quarter, up by $65 million from the year-ago period. Excluding special items, the company reported a net income of $37 million, or $0.48 per diluted share, compared to a net income of $45 million, or $0.55 per diluted share, in the fourth quarter of 2020.
The company reported GAAP net income of $307 million, or $3.83 per diluted share for 2021, compared to net income of $10 million, or $0.12 per diluted share, in 2020. Sales were $3.7 billion, up by 31 percent from the previous year. Excluding special items, the company reported a net income of $523 million, or $6.51 per diluted share, compared to a net income of $56 million, or $0.65 per diluted share, in 2020.
“The $921 million of adjusted EBITDA generated in 2021 allowed us to reduce our debt, invest in our business and return cash to shareholders,” said Remi G. Lalonde, president and chief executive officer. “Our fourth quarter results reflect higher realized prices across most of our segments, especially wood products, but also cost pressures across the business. We faced higher manufacturing costs, mainly due to higher energy prices, lower internal power generation and higher fiber costs, as well as higher freight costs and a mark-to-market of share-based awards following a stock price appreciation of roughly 30% in Q4. Rising interest rates helped to reduce our net pension and OPEB deficit by over $400 million this year, further strengthening our balance sheet and credit profile.
“We also recently amended and extended our ABL credit facility, which includes an ESG module, one of the first examples in the forest products industry. Looking back on the year, I am particularly proud of our employees for setting a new bar on safety, with an annual OSHA incident rate of 0.47. Our long-term ambition is to continue to improve until we reach 0 injury, but this is an impressive success along the way – despite the pandemic and other challenges – and I wholeheartedly applaud our employees for our achievement,” he added.
Resolute’s market pulp segment recorded operating income of $19 million in the fourth quarter, $27 million lower than in the previous quarter. The average transaction price slipped by $20 per metric ton and shipments fell by 29,000 metric tons as a result of logistics constraints and lower productivity, mostly at the Calhoun mill. The operating cost per unit rose by $67 per metric ton, or 10 percent, reflecting higher fibre and energy costs, as well as lower internal power generation as a result of a turbine failure at the Saint-Félicien (Quebec) mill. Finished goods inventory was 59,000 metric tons at year-end, up by 7,000 metric tons in the quarter due to logistics constraints. EBITDA in the segment was $25 million.
For 2021, the market pulp segment reported an operating income of $99 million, compared to an operating loss of $1 million in 2020. The change reflects a $168 per metric ton, or 28 percent, increase in the average transaction price, offset by a 56,000 metric ton drop in shipments due to lower productivity. The delivered cost rose by $74 per metric ton, mainly due to higher prices for energy and lower internal power generation at Saint-Félicien. EBITDA in the segment was $123 million for the year.
Resolute reported an operating loss of $6 million in the tissue segment in the quarter, compared to an operating loss of $9 million in the third quarter. The average transaction price improved by $160 per short ton, or nine percent, due to better product mix, and shipments rose by 1,000 short tons on improving market conditions. The delivered cost increased by $37 per short ton, or two percent, partly due to higher freight costs. Finished goods inventory was unchanged at 6,000 short tons. Quarter-over-quarter segment EBITDA improved by $3 million, to negative $1 million.
For the year, the tissue segment reported an operating loss of $24 million, compared to a loss of $1 million in 2020. The average transaction price slipped by $10 per short ton because of unfavourable product mix. The delivered cost rose by $249 per short ton due to higher fibre costs and accumulated market downtime as a result of consumer inventory rebalancing and pandemic-related logistics and labour challenges. Shipments were lower by 6,000 short tons. The difficult market conditions in 2021 and the impact of market downtime ($6 million), a process improvement program ($5 million) and the ramp-up of the Hagerstown converting facility ($6 million), contributed to weaker performance in 2021, with EBITDA in the segment at negative $5 million for the year.
Despite the lost integration benefit of approximately $15 million in the tissue segment and approximately $5 million for ongoing costs associated with closed site maintenance, the company anticipates an improvement in its overall operating income of approximately $35 million to $40 million as a result of the indefinite idling of pulp and paper operations at Calhoun.
The paper segment incurred an operating loss of $4 million in the quarter, compared to an operating income of $16 million in the third quarter. The average transaction price rose by $29 per metric ton, or four percent, with increases in all grades, but the delivered cost increased by $78 per metric ton, or 12 percent, due to higher energy prices and unfavourable maintenance and fibre costs, as well as lower internal power generation due to low water levels at Hydro-Saguenay. Shipments slipped by 10,000 metric tons, and finished goods inventory rose by 12,000 metric tons, as a result of logistics constraints with limited railcar and truck availability. EBITDA in the segment was $12 million for the quarter.
For the year, the segment recorded an operating loss of $19 million, compared to an operating loss of $46 million in 2020, reflecting a $66 per metric ton improvement in the average transaction price, offset by a reduction of 99,000 metric tons in shipments following capacity reductions earlier in the pandemic. The delivered cost rose by $50 per metric ton, mainly due to higher energy prices, unfavourable maintenance costs due to timing and scope, and higher expenses related to a process improvement project, partly offset by the indefinite idling of the Baie-Comeau and Amos newsprint mills. EBITDA for the segment was $43 million in 2021.
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