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Canfor Pulp Products Inc. Announces First Quarter 2018 Results and Quarterly Dividend

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Canfor Pulp Products Inc. Announces First Quarter 2018 Results and Quarterly Dividend

Canada NewsWire

VANCOUVER, April 24, 2018 /CNW/ - Canfor Pulp Products Inc. ("CPPI") (TSX:CFX) today reported first quarter 2018 results and quarterly dividend:

Canfor Pulp Products Inc. (CNW Group/Canfor Pulp Products Inc.)

Highlights

  • Record quarterly operating income of $85 million, surpassing previous high set in the fourth quarter of 2017
  • Record-high quarterly sales of $360 million
  • Net income of $64 million, or $0.99 per share

Financial Results

The following table summarizes selected financial information for the Company for the comparative periods:



Q1 


Q4


          Q1

(millions of Canadian dollars, except per share amounts)


2018


2017


2017

Sales

$

359.7

$

322.9

$

309.2

Operating income before amortization

$

104.3

$

85.6

$

54.0

Operating income

$

85.1

$

66.8

$

35.2

Net income

$

64.3

$

45.2

$

24.1

Net income per share, basic and diluted

$

0.99

$

0.69

$

0.36

Adjusted net income1

$

64.3

$

48.0

$

24.1

Adjusted net income per share, basic and diluted1

$

0.99

$

0.73

$

0.36

1

Adjusted for $2.8 million increase in tax expense that was recognized in the fourth quarter of 2017, as a result of an increase in the corporate tax rate that was substantively enacted by the Provincial Government of British Columbia.

 

The Company reported operating income of $85.1 million for the first quarter of 2018, an increase of $18.3 million from the $66.8 million reported in the fourth quarter of 2017 as the benefit of near-record high US-dollar pricing for Northern Bleached Softwood Kraft ("NBSK") pulp and improved productivity in the latter part of the quarter more than offset challenges presented by severe winter weather in Western Canada earlier in the period, and the effects of major transportation disruptions to all the Company's operations through the quarter.

Global softwood pulp markets remained favourable through the first quarter of 2018, resulting in US-dollar NBSK pulp list prices holding at near-record high prices, and a significant increase in average NBSK pulp unit sales realizations. Average Bleached Chemi-Thermo Mechanical Pulp ("BCTMP") unit sales realizations showed a more moderate increase in the quarter, with increased demand towards the end of 2017 translating into higher average prices for product shipped in the current quarter.

Pulp shipments were up 3% from the previous quarter, as a 14,000 tonne vessel slippage from December into January more than offset transportation constraints which reflected challenging weather conditions in Western Canada. Pulp production was broadly in line with the fourth quarter of 2017, as strong productivity in March combined with increased operating days following the unscheduled outage at the Company's Northwood pulp mill in the previous quarter largely offset the impacts of various weather-related disruptions in January and February. Pulp unit manufacturing costs were moderately higher than the previous quarter, largely reflecting market-driven increases in fibre costs and weather-related increases in energy costs.

Operating income in the Company's paper segment at $2.9 million was down $4.5 million from the fourth quarter of 2017, as improved paper unit sales realizations were more than offset by increased slush pulp costs linked to higher Canadian dollar NBSK market pulp prices. 

Commenting on the Company's first quarter of 2018 results, CPPI's Chief Executive Officer, Don Kayne said, "Notwithstanding the various disruptions caused by severe weather conditions in January and February, we had a solid operating performance in the quarter that enabled us to capitalize on the current favourable pulp market conditions and deliver new record-high sales, operating income and net income."  

Global softwood kraft pulp markets are projected to remain well positioned through the second quarter of 2018, reflecting both continued solid demand and tighter supply arising from the current transportation challenges as well as the traditional spring maintenance period. The outlook for the latter part of 2018 remains more uncertain given incremental pulp capacity currently projected to come online. For the month of April 2018, the Company announced an increase of US$30 per tonne for NBSK pulp list prices to North America. The ongoing transportation disruptions and associated impact on shipments are projected to continue for several months as transportation networks slowly return to normal service levels.

Results in the second quarter of 2018 will reflect scheduled maintenance outages at the Prince George NBSK pulp mill and paper machine, as well as at the Taylor BCTMP mill, with a projected 5,000 tonnes of reduced NBSK pulp production, 4,000 tonnes of reduced paper production and 11,000 tonnes of reduced BCTMP production, respectively, combined with higher associated maintenance costs and lower projected shipment volume. The scheduled outage at the Taylor BCTMP mill will include work associated with the previously announced energy project. The Northwood NBSK pulp mill has a maintenance outage scheduled for the third quarter of 2018, with a projected 22,000 tonnes of reduced NBSK pulp production.

On April 24, 2018, the Board of Directors declared a quarterly dividend of $0.0625 per share, payable on May 14, 2018 to the shareholders of record on May 7, 2018.

Additional Information and Conference Call
A conference call to discuss the first quarter's financial and operating results will be held on Thursday, April 26, 2018 at 7:30 AM Pacific time. To participate in the call, please dial Toll-Free 1-888-390-0546. For instant replay access until May 10, 2018, please dial Toll-Free 1-888-390-0541 and enter participant pass code 150025#. The conference call will be webcast live and will be available at www.canfor.com. This news release, the attached financial statements and a presentation used during the conference call can be accessed via the Company's website at http://www.canfor.com/investor-relations/webcasts.

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.

Canfor Pulp Products Inc.
First Quarter 2018
Management's Discussion and Analysis

This interim Management's Discussion and Analysis ("MD&A") provides a review of Canfor Pulp Products Inc.'s ("CPPI" or "the Company") financial performance for the quarter ended March 31, 2018 relative to the quarters ended December 31, 2017 and March 31, 2017, and the financial position of the Company at March 31, 2018. It should be read in conjunction with CPPI's unaudited interim consolidated financial statements and accompanying notes for the quarters ended, March 31, 2018 and 2017, as well as the 2017 annual MD&A and the 2017 audited consolidated financial statements and notes thereto, which are included in CPPI's Annual Report for the year ended December 31, 2017 (available at www.canfor.com). The financial information in this interim MD&A has been prepared in accordance with International Financial Reporting Standards ("IFRS"), which is the required reporting framework for Canadian publicly accountable enterprises.

Throughout this discussion, reference is made to Operating Income before Amortization which CPPI considers to be a relevant indicator for measuring trends in the Company's performance and its ability to generate funds to meet its debt service and capital expenditure requirements, and to pay dividends. Reference is also made to Adjusted Net Income (calculated as Net Income less specific items affecting comparability with prior periods) and Adjusted Net Income per Share (calculated as Adjusted Net Income divided by the weighted average number of shares outstanding during the period). Operating Income before Amortization, Adjusted Net Income and Adjusted Net Income per Share are not generally accepted earnings measures and should not be considered as an alternative to net income or cash flows as determined in accordance with IFRS. As there is no standardized method of calculating these measures, CPPI's Operating Income before Amortization, Adjusted Net Income and Adjusted Net Income per Share may not be directly comparable with similarly titled measures used by other companies. Reconciliations of Operating Income before Amortization to Operating Income and Adjusted Net Income to Net Income reported in accordance with IFRS are included in this MD&A. Throughout this discussion reference is made to the current quarter which refers to the results for the first quarter of 2018.  

Factors that could impact future operations are also discussed. These factors may be influenced by both known and unknown risks and uncertainties that could cause the actual results to be materially different from those stated in this discussion. Factors that could have a material impact on any future oriented statements made herein include, but are not limited to: general economic, market and business conditions; product selling prices; raw material and operating costs; currency exchange rates; interest rates; changes in law and public policy; the outcome of labour and trade disputes; and opportunities available to or pursued by CPPI.

All financial references are in millions of Canadian dollars unless otherwise noted. The information in this report is as at April 24, 2018. 

Forward Looking Statements

Certain statements in this MD&A 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.

FIRST QUARTER 2018 OVERVIEW

Selected Financial Information and Statistics



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