Canfor Pulp Products Inc. (“CPPI”) (TSX: CFX) today reported net income of $12.6 million, or $0.19 per share, for the third quarter of 2017, compared to $20.2 million, or $0.31 per share, for the second quarter of 2017 and $22.4 million, or $0.34 per share, for the third quarter of 2016. For the nine months ended September 30, 2017, the Company’s net income was $56.9 million, or $0.86 per share, compared to $47.7 million, or $0.70 per share, for the nine months ended September 30, 2016.
The Company reported operating income of $21.1 million for the third quarter of 2017, down $10.4 million from the $31.5 million reported for the second quarter of 2017. While pulp shipments and production were both up quarter-over-quarter, the related increase in operating income was more than offset by the impact on unit pulp and paper sales realizations of a significantly stronger Canadian dollar.
Entering the third quarter of 2017, global pulp markets showed signs of weakness; however, as the quarter progressed, demand and pricing rebounded particularly in China, in part due to China’s new regulations restricting the import of recycled mixed paper. The resulting positive price momentum will largely be realized in the fourth quarter of 2017, reflecting the timing of shipments (versus orders). As a result average Northern Bleached Softwood Kraft (“NBSK”) pulp US-dollar list prices to China were consistent quarter-over-quarter; however, NBSK pulp unit sales realizations experienced a moderate decrease, due to a 5 cent or 7% stronger Canadian dollar. Bleached Chemi-Thermo Mechanical Pulp (“BCTMP”) US-dollar list prices trended positively through the third quarter of 2017, but BCTMP unit sales realizations were also negatively impacted by a stronger Canadian dollar. Energy revenues were well up in the current quarter reflecting a return to more normalized power generation levels.
Pulp shipments and production volumes were up 10% and 11%, respectively, from the previous quarter, principally reflecting a decline in scheduled maintenance outages. In the current quarter, the Company completed a scheduled maintenance outage at the Intercontinental NBSK pulp mill which reduced pulp production by approximately 10,000 tonnes. In the second quarter, a scheduled maintenance outage at the Company’s larger Northwood NBSK pulp mill resulted in approximately 33,000 tonnes of reduced production. Shipments for the third quarter of 2017 were also impacted by a 14,000 tonne vessel slippage into early October. Pulp unit manufacturing costs improved from the previous quarter, largely reflecting the lower quarter-over-quarter scheduled maintenance outages coupled with seasonally lower energy prices and usage.
Operating income in the Company’s paper segment at $4.9 million was down $1.7 million from the second quarter of 2017, largely reflecting a modest decline in paper unit sales realizations, due to higher market-driven US-dollar paper pricing being more than offset by the stronger Canadian dollar. Partially offsetting this decline in paper unit sales realizations was a moderate improvement in paper unit manufacturing costs, primarily driven by lower slush pulp costs, combined with a decline in maintenance spend.
more detail at: http://canfor.com/docs/default-source/news-2017/2017_q3_cppi_press_release_cnw_final.pdf?sfvrsn=b910eb91_2