It was a banner year for the bottom line at Canfor.
The lumber and pulp producer reaped a record $1.5 billion in net income, or $12.16 US per share, over the course of 2021, according to year-end results issued March 1, more than two-and-a-half times the previous milestone of $556 million, or $4.44 US per share, the company took in during 2020.
The figures are in Canadian dollars, except for the per share amounts.
"Unprecedented strength in global lumber markets" that drove benchmark prices to new highs in the first half of the year were credited for much of the outcome. However, how much the company's operations in B.C. played into the success was put in doubt.
"This record pricing, coupled with higher production and shipment volumes in Europe and the U.S. South substantially outweighed the impacts of extreme weather and higher log costs in British Columbia, and operational challenges faced by the Company’s pulp business in the latter part of the year," it said in the summary.
During a conference call with analysts, chief executive officer Don Kayne said many of its B.C. sawmills were on reduced operating schedules during the second half of the year.
"B.C. continues to be a challenging jurisdiction to operate in due to a smaller fibre basket as we enter the post-mountain pine beetle era, in addition to significant uncertainty brought on by several new and proposed policy changes, land use decisions and legal decisions," Kayne said.
Those initiatives include the provincial government's announced deferral of harvesting on 2.6 million hectares of B.C.'s old growth forest.
As well, in June, a B.C. Supreme Court Justice found accumulated industrial development in the B.C. Peace had violated the treaty rights of the Blueberry First Nation and gave the provincial government six months to work with the nation to improve land management and the permitting process. Those negotiations remain ongoing.
Adjusted net income for the fourth quarter stood at $154.6 million or $1.24 US per share. The average price for random length western spruce, pine and fir #2 and better averaged $711 US per thousand board feet, up $217 US from the previous quarter.
Canfor's pulp operations contributed $25 million in adjusted net income, or 38 cents US per share, compared to a lost os $22.4 million or 34 cents per share over 2020.
A rebuild of the lower furnace of number one recovery boiler at the Northwood pulp mill is going well and the operation is expected to return to full production at the end of the first quarter, analysts were also told.
The Taylor pulp mill is the middle of a six-week curtailment due to a number of logistical issues, with a projected 25,000 tonnes of reduced production.
Chief financial officer Pat Elliot said the net book value of Canfor's lumber and pulp assets in B.C. were reduced by nearly $300 million following an impairment test.
"As we move into 2022, we anticipate solid global lumber demand, while for our pulp business we are focused on optimizing production performance, reducing costs, and maximizing fibre utilization in more moderate market conditions,” Kayne said in the summary.