Overview
- Q3 2023 reported operating loss of
$49 million ; net loss of$36 million , or$0.55 per share - Stable global pulp market fundamentals throughout the quarter, as a slight uptick in purchasing activity in
China was offset by ongoing challenging conditions in other global regions Northwood NBSK Pulp Mill scheduled maintenance downtime and inspection of recovery boiler number one completed as planned; restart delayed due to operational challenges
Financial Results
The following table summarizes selected financial information for CPPI for the comparative periods:
Q3 | Q2 | YTD | Q3 | YTD | ||||||
(millions of Canadian dollars, except per share amounts) | 2023 | 2023 | 2023 | 2022 | 2022 | |||||
Sales | $ | 188.8 | $ | 249.5 | $ | 681.6 | $ | 308.3 | $ | 817.5 |
Reported operating income (loss) before amortization | $ | (27.7) | $ | (15.3) | $ | (43.6) | $ | 46.7 | $ | 56.5 |
Reported operating income (loss) | $ | (49.3) | $ | (37.9) | $ | (112.4) | $ | 19.2 | $ | (14.9) |
Adjusted operating income (loss) before amortization | $ | (29.7) | $ | (8.4) | $ | (35.1) | $ | 45.6 | $ | 54.8 |
Adjusted operating income (loss)1 | $ | (51.3) | $ | (31.0) | $ | (103.9) | $ | 18.1 | $ | (16.6) |
Net income (loss) | $ | (35.7) | $ | (28.4) | $ | (82.9) | $ | 16.3 | $ | (9.3) |
Net income (loss) per share, basic and diluted | $ | (0.55) | $ | (0.44) | $ | (1.27) | $ | 0.25 | $ | (0.14) |
1 Adjusted results referenced throughout this news release are defined as non-IFRS financial measures. For further details, refer to the "Non-IFRS Financial Measures" section of this document. |
The Company reported an operating loss of
Commenting on the Company's third quarter of 2023 results, CPPI's President and Chief Executive Officer,
Global softwood pulp market fundamentals were relatively flat through the current quarter, following a significant decline in the preceding quarter. Later in the period, however, buyers started to regain some market confidence, with lower global pulp pricing leading to a slight increase in purchasing activity, as producers worked to reduce their higher-than-average inventory levels. Consequently, US-dollar NBSK list prices to
Pulp production was down 28,000 tonnes, or 19%, from the previous quarter. Early in the current period, NBSK pulp production was impacted by a labour dispute at the Ports of
Operating income in the Company's paper segment was
Looking forward, global softwood pulp markets are anticipated to experience a slight improvement in the fourth quarter of 2023, as elevated inventory levels slowly begin to normalize following the seasonally slower summer months. These factors are projected to be tempered by general global economic uncertainty and pressures.
The Company's results in the fourth quarter of 2023 will reflect the aforementioned operational challenges at Northwood associated with the delayed startup, with a projected 30,000 tonnes of reduced NBSK pulp production, combined with higher associated maintenance costs and lower shipment volumes. These factors are also anticipated to give rise to a larger-than-normal unfavourable timing lag in shipments (vs orders) and thus it is estimated that fourth quarter results will reflect persistently lower NBSK pulp sales unit realizations, regardless of any uptick in US-dollar NBSK list prices that may arise.
While no major maintenance outages are planned at the Company's operations in the fourth quarter of 2023, given the ongoing uncertainty with regards to the availability of economically viable fibre in BC, and a projected weaker North American lumber market, the Company anticipates a challenging fibre supply environment for its pulp mills (both for sawmill residual chips and whole-log chips). The Company will continue to monitor operating conditions and will adjust operating rates, to align with economically viable fibre supply, through the balance of 2023 and into 2024.
Bleached kraft paper markets are anticipated to continue to soften through the balance of 2023, particularly in North America, as tepid demand is combined with above-average paper inventory levels.
Additional Information and Conference Call
A conference call to discuss the third quarter's financial and operating results will be held on
Non-IFRS Financial Measures
Throughout this news release, reference is made to certain non-IFRS financial measures which are used to evaluate the Company's performance but are not generally accepted under IFRS and may not be directly comparable with similarly titled measures used by other companies. The following table provides a reconciliation of these non-IFRS financial measures to figures reported in the Company's condensed consolidated interim financial statements:
Q3 | Q2 | YTD | Q3 | YTD | ||||||
(millions of Canadian dollars) | 2023 | 2023 | 2023 | 2022 | 2022 | |||||
Reported operating income (loss) | $ | (49.3) | $ | (37.9) | $ | (112.4) | $ | 19.2 | $ | (14.9) |
Inventory write-down (recovery), net | $ | (2.0) | $ | 6.9 | $ | 8.5 | $ | (1.1) | $ | (1.7) |
Adjusted operating income (loss) | $ | (51.3) | $ | (31.0) | $ | (103.9) | $ | 18.1 | $ | (16.6) |
Amortization | $ | 21.6 | $ | 22.6 | $ | 68.8 | $ | 27.5 | $ | 71.4 |
Adjusted operating income (loss) before amortization | $ | (29.7) | $ | (8.4) | $ | (35.1) | $ | 45.6 | $ | 54.8 |
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.
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