Resolute Forest Products Inc. reported net income for 2Q 2022 of $256 million, or $3.29 per diluted share, compared to net income of $268 million, or $3.34 per diluted share, in the same period in 2021.
Sales were $1,058 million in 2Q 2022, down $82 million from the prior year period. Excluding special items, the company reported net income of $155 million, or $2.00 per diluted share, compared to net income of $300 million, or $3.74 per diluted share, in 2Q 2021.
Operating profit of $217 million reported in 2Q 2022 was $189 million lower than the comparable quarter of 2021. The difference includes higher selling prices for the pulp, paper and tissue papers ($108 million), more than offset by lower selling prices for wood ($157 million) and lower shipments due to logistical constraints ($17 million). The company had to deal with higher manufacturing costs ($104 million), mainly related to fiber costs ($42 million), maintenance costs, labor and external services ($31 million) and energy prices ($25 million), as well as higher transportation costs ($25 million) . It also benefited from the drop in the Canadian dollar ($8 million).
The wood products segment generated operating income of $180 million in the quarter, down $39 million from the prior quarter. The average transaction price fell to $931 per thousand board feet, a decline of $91 per thousand board feet, or 9%, reflecting lower benchmark lumber prices, despite the positive impact of the consolidation of engineered wood products in the sector’s sales following the acquisition of the others 50% interest in Résolu-LP Bois d’ingénieur Larouche Inc. and Résolu-LP Société en commandite St-Prime engineering. Shipments increased by 65 million board feet, but finished product inventories increased by 16 million board feet, to 239 million board feet, reflecting continued challenges with rail car availability. The operating cost per unit (or “delivery cost“) increased by $43 per thousand board feet, or 8%, primarily reflecting higher log costs due to stumpage fees and fuel prices. Segment EBITDA decreased by $39 million, to settle at $191 million.
Market pulp operating profit was $41 million in the second quarter, up $19 million from the prior quarter. The average transaction price increased by $117 per metric ton, or 14%, due to more favorable market conditions. Shipments increased by 29,000 metric tons, reducing finished product inventories from 14,000 metric tons to 68,000 metric tons at the end of the quarter. Landed cost increased by $42 per metric ton, primarily due to higher maintenance and fiber costs. The segment’s EBITDA improved by $22 million to reach $48 million.
The fabrics segment suffered an operating loss of $9 million in the quarter, in line with the first quarter. The average transaction price increased by $84 per short ton, or 4%, due to higher market prices. Shipments increased by 1,000 short tons and finished product inventories decreased by 2,000 short tons. Delivery cost increased $126 per short ton, or 6%, primarily due to higher market pulp prices. Segment EBITDA decreased by $1 million to minus $5 million.
The Paper segment reported operating profit of $37 million in the quarter, an improvement of $12 million from the prior quarter. The average transaction price increased by $35 per metric ton, or 5%, due to stronger market conditions across all grades. Shipments increased by 29,000 metric tons, helping to reduce finished product inventories from 18,000 metric tons to 67,000 metric tons at the end of the quarter. Landed cost increased by $11 per metric ton, or 2%, primarily due to higher freight and maintenance costs. EBITDA improved by $13 million to $47 million.
Resolute Forest Products is a global leader in the forest products industry with a diverse line of products.