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Compared to the first quarter of 2012, unit manufacturing costs were up, reflecting higher unit log costs impacted by market-price related stumpage increases and higher hauling costs, coupled with slightly higher unit cash conversion costs attributable in part to the integration of the Kootenay area mills and the re-start of the Radium mill.
Pulp and Paper
Selected Financial Information and Statistics - Pulp and Paper(15, 16)
(millions of Canadian dollars Q1 Q4 Q1unless otherwise noted) 2013 2012 2012--------------------------------------------------------------------------Sales $ 243.5 $ 228.4 $ 249.4Operating income before amortization $ 38.3 $ 32.5 $ 29.0Operating income $ 18.9 $ 12.0 $ 11.3--------------------------------------------------------------------------Average pulp price delivered to U.S. - US$(17) $ 897 $ 863 $ 870Average price in Cdn$ $ 905 $ 855 $ 871--------------------------------------------------------------------------Production - pulp (000 mt) 317.0 314.1 315.9Production - paper (000 mt) 34.8 35.4 32.9Shipments - pulp (000 mt) 308.2 297.8 327.8Shipments - paper (000 mt) 35.0 32.1 29.6--------------------------------------------------------------------------(15) Certain prior period amounts have been restated due to the adoption ofamended IAS 19, Employee Benefits. Further details can be found in theCompany's unaudited interim consolidated financial statements.(16) Includes the Taylor pulp mill and 100% of Canfor Pulp Products Inc.,which is consolidated in Canfor's results. Pulp production and shipmentvolumes presented are for both NBSK and bleached chemi-thermo mechanicalpulp ("BCTMP").(17) Per tonne, NBSK pulp list price delivered to U.S. (Resource InformationSystems, Inc.).Overview
Operating income for the pulp and paper segment was $18.9 million for the first quarter of 2013, an improvement of $6.9 million from the previous quarter, and $7.6 million up from the first quarter of 2012.
Improved pulp and paper segment results compared to the previous quarter reflected a modest increase in NBSK pulp sales realizations coupled with an increase in pulp shipments, with increased volumes into China. Further contributing to the positive results was a small reduction in unit manufacturing costs largely reflecting reduced maintenance spending and to a lesser extent an increase in production volumes, offset in part by slightly higher fibre costs. Included in both quarters' results were certain one-time items: the current quarter results included a $1.5 million non-cash benefit from scientific research and development tax credits, while the fourth quarter of 2012 included a $5.3 million gain related to post retirement plan adjustments.
Higher operating earnings compared to the first quarter of 2012 reflected largely unchanged unit manufacturing costs as well as increased energy sales under the Energy Purchase Agreement ("EPA") at Canfor Pulp's Prince George Pulp Mill.
NBSK pulp sales realizations were broadly in line with the first quarter of 2012 as a 3% increase in the average North American NBSK pulp list price was offset by an increased volume of shipments to lower-margin regions, principally China. A reduction in fibre costs offset increased energy and maintenance spending (timing-related) compared to the first quarter of 2012. Other contributing factors included the aforementioned benefit from the scientific research and development tax credits.
