Canfor Pulp had an exceptionally strong year in 2018, reporting record-high operating income of $246.6 million, net income of $2.83 per share and a return on invested capital of 37%.
For the fourth quarter of 2018, the Company reported operating income of $15.6 million, a decrease of $44.9 millionfrom $60.5 million reported for the third quarter of 2018. Results for the current quarter reflected repairs to one of the Company’s Northwood Pulp Mill (“Northwood”) recovery boilers, and operational disruptions resulting from a third-party natural gas explosion in Prince George early in the quarter, combined with their respective effects on production volumes, shipments and manufacturing costs.
Reflecting weaker demand from China, global softwood pulp market demand was down in the fourth quarter of 2018, with global softwood pulp producer inventory levels remaining above normal through the quarter. US-dollar Northern Bleached Softwood Kraft (“NBSK”) pulp list prices to China averaged US$805 per tonne, down 9% from the prior quarter, with prices ending the year at US$725 per tonne. The Company’s average NBSK unit sales realizations, however, were broadly in line with the prior quarter as the lower US-dollar pricing to China was largely offset by higher US-dollar pricing to North America, proportionately higher shipments to North America, and a 1 cent, or 1%, weaker Canadian dollar. Bleached Chemi-Thermo Mechanical Pulp (“BCTMP”) US-dollar pricing came under modest downward pressure during the current quarter; however, the Company’s sales realizations remained steady quarter-over-quarter reflecting the timing of shipments (versus orders) and a weaker Canadian dollar.