The extended shutdown of Northwood Pulp and Paper had an impact on Canfor Pulp Ltd.'s bottom line, the company's management said Tuesday during a quarterly conference call.
An already longer-than-usual annual maintenance shutdown was extended a further two weeks to complete a $100-million upgrade of a recovery boiler, funded by the federal government's green transformation program.
It reduced production by 45,000 in the third quarter, up 5,000 from the initial estimate, and will cause a further 20,000 tonne drop in the fourth, officials said.
The extension was attributed to "unforeseen delays" and unit manufacturing costs rose six per cent compared to the previous quarter primarily because of the extended outage as well as slightly higher fibre costs.
As a result, the company's earnings before taxes, interest, depreciation and amortization (EBITDA), declined by $14.5 million from the previous quarter to $49.6 million.
"The causes of the quarter-over-quarter change are fairly evenly split between lower pulp prices and the impacts of lost production from the Northwood pulp mill shutdown," said chief financial officer Terry Hodgins said
Nonetheless, the company report net income of $23.9 million on sales of $233.9 million and Canfor Pulp Products Inc. (CPPI), which owns 49.8 per cent of Canfor Pulp Ltd., declared a 40 cents per share dividend payable Nov. 10.
The Northwood mill is now back in operation and chief executive officer Joe Nemeth said the upgrade is expected to deliver significant environmental benefits and further improve the company's cost position.
"There were a number of unforeseen delays, nothing to do with the scope of the project or what we hoped to achieve in terms of benefits," Nemeth said.
In all, the federal government has assured CPPI $122 million in funding for four projects, three of which are now completed and a fourth, an upgrade to the feedwater system and precipitator at P.G. Pulp and Paper remains on the books.
