Canfor Pulp Products Q4 2015 results
By Canfor Pulp Products
February 18, 2016 - Canfor Pulp Products Inc. reported net income of $29.7 million, or $0.43 per share, for the fourth quarter of 2015, compared to $31.2 million, or $0.45 per share, for the third quarter of 2015 and $20.7 million, or $0.29 per share, for the fourth quarter of 2014. For the year ended December 31, 2015, the Company's net income was $106.6 million, or $1.52 per share, compared to $89.5 million, or $1.26 per share, for 2014.
The following table summarizes selected financial information for the Company for the comparative periods:
(millions of Canadian dollars, except per share amounts)
After adjusting for items affecting comparability with the prior periods, the Company's adjusted net income for the fourth quarter of 2015 was $29.0 million, or $0.42 per share, compared to an adjusted net income of $34.8 million, or $0.50 per share, for the third quarter of 2015. For 2015, CPPI's adjusted net income was $111.8 million, or $1.59 per share, compared to $90.9 million, or $1.28 per share, for 2014.
The company reported operating income of $38.6 million for the fourth quarter of 2015, a decrease of $3.7 million from $42.3 million reported for the third quarter of 2015. Fourth quarter results reflected increased pulp production and shipment volumes as well as higher energy revenues, which largely offset slightly lower Northern Bleached Softwood Kraft ("NBSK") pulp sales realizations and costs associated with the scheduled maintenance outage at the company's Northwood pulp mill in October. The increased pulp production and energy revenue reflected improved operating rates, and, in the case of energy revenue, seasonally higher energy prices.
Global softwood pulp markets weakened somewhat through most of the fourth quarter of 2015, before stabilizing towards the end of the year, reflecting to some extent recent increases in hardwood pulp supply, particularly in China. The average NBSK pulp list price to North America, as published by RISI, was down US$22 per tonne, or 2%, to US$945 per tonne while more pronounced declines were seen in average US-dollar NBSK pulp list prices to China and Europe. Overall, however, NBSK pulp unit sales realizations were down only slightly from the third quarter of 2015 as the continued weakening of the Canadian dollar which was down 2% from the previous quarter, mitigated the impact of lower prices. Bleached Chemi-Thermo Mechanical Pulp ("BCTMP") markets remained under pressure in the fourth quarter of 2015, with unit sales realizations down slightly compared to the previous quarter. In December, the Company temporarily curtailed operations at the Taylor pulp mill for eight days in response to the challenging BCTMP market conditions.
Pulp shipments were up 16% from the previous quarter reflecting solid demand for the Company's NBSK premium reinforcing pulp products. Pulp production was up approximately 4%, as improved operating rates and additional operating days more than offset the impact of the Northwood pulp mill scheduled maintenance outage, which reduced market pulp production by 20,000 tonnes in the current quarter (compared to 6,000 tonnes in the third quarter). Pulp unit manufacturing costs were up slightly from the previous quarter, for the most part reflecting costs associated with the Northwood pulp mill maintenance outage and seasonally higher energy costs, which more than offset lower fibre costs and improved productivity.
Operating income in the company's paper segment at $6.9 million for the fourth quarter of 2015 was broadly in line with the previous quarter as increased production and shipment volumes offset slightly lower unit sales realizations.
In the fourth quarter of 2015, the company purchased 692,985 common shares and continued its quarterly dividend of $0.0625 per share returning a total of $14.1 million to shareholders. For 2015, the Company returned a total of $122.1 million to shareholders through its dividend and share purchase programs including a special dividend of $79.0 million paid in August.
Commenting on the fourth quarter's results, CPPI's CEO Don Kayne said, "Canfor Pulp had another quarter of solid operating results, reflecting not only relatively stable Canadian-dollar sales realizations, but strong operating performance and the continued growth of the green energy business."
For the month of January 2016, NBSK pulp list prices were unchanged in North America at US$940 per tonne, while prices to China decreased US$5 to US$590 per tonne. For the month of March 2016, the Company has announced a list price of US$960 per tonne in North America. In the second quarter of 2016, producer inventories are forecast to decline during the industry's traditional spring maintenance period. There are no maintenance outages planned for the first quarter of 2016.
On February 17, 2016, the Board of Directors declared a quarterly dividend of $0.0625 per share, payable on March 8, 2016 to the shareholders of record on March 1, 2016.
Refer to the Company's Annual Management's Discussion and Analysis for further discussion on the Company's results for the fourth quarter of 2015.
Forward looking statements
Certain statements in this press release constitute "forward-looking statements" which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Words such as "expects", "anticipates", "projects", "intends", "plans", "will", "believes", "seeks", "estimates", "should", "may", "could", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and actual events or results may differ materially. There are many factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements. Forward-looking statements are based on current expectations and the Company assumes no obligation to update such information to reflect later events or developments, except as required by law.
CPPI is a leading global supplier of pulp and paper products with operations in the central interior of British Columbia ("BC") employing approximately 1,300 people throughout the organization. Canfor Pulp owns and operates three mills in Prince George, BC with a total capacity of 1.1 million tonnes of Premium Reinforcing Northern Bleached Softwood Kraft Pulp and 140,000 tonnes of kraft paper, as well as one mill in Taylor, BC with an annual production capacity of 220,000 tonnes of Bleached Chemi-Thermo Mechanical Pulp ("BCTMP"). Canfor Pulp is the largest North American and one of the largest global producers of market NBSK Pulp. CPPI shares are traded on the Toronto Stock Exchange under the symbol CFX.