VANCOUVER, BC, March 5, 2024 - Canfor Corporation ("The Company" or "Canfor") (TSX: CFP) today reported its 2023 and fourth quarter of 2023 results:
Overview
- 2023 operating loss of $532 million; shareholder net loss of $326 million, or $2.71 per share
- Q4 2023 operating loss of $191 million; shareholder net loss of $117 million or $0.98 per share
- Solid earnings for the Company's European and US South operations in 2023, with persistent challenges in British Columbia
- Successful execution of significant capital growth program in the US South throughout 2023
- Sustained pressure on global lumber market conditions and pricing through most of the fourth quarter, drove quarter-over-quarter decline in results in all lumber operating regions, most notably in Western Canada
- Moderate uplift in global pulp market fundamentals through the fourth quarter driven by a slight increase in demand and purchasing activity in most major regions; 20% improvement in pulp production quarter-over-quarter
- Ongoing challenges with the availability of economically viable fibre impacting lumber and pulp operating rates in British Columbia into 2024
2023 was a challenging year for Canfor, as the weak global lumber market conditions experienced late in 2022 continued throughout the current year. Ongoing inflationary pressures and high interest rates gave rise to persistent affordability concerns for consumers, reducing global lumber demand and increasing lumber inventory levels in most global regions. Despite the economic uncertainty, demand in the repair and remodel segment remained strong through 2023, especially in North America, exceeding levels observed before the pandemic.
In response to these global market conditions as well as a constrained fibre supply environment, the Company reduced production at its Western Canadian operations by a total of 760 million board feet in 2023. In the US South, the Company successfully started-up its greenfield sawmill in DeRidder, Louisiana, early in 2023, and continues work on two major growth projects at Urbana, Arkansas and Axis, Alabama.
In British Columbia ("BC"), the Company continued to face significant challenges accessing economically viable fibre, both logs and residuals, to support its BC operations, which resulted in closure announcements early in 2023. Canfor Pulp Products Inc. ("CPPI") made the decision to permanently close the pulp line at its Prince George Pulp and Paper Mill ("PG") in April. In connection with this closure, CPPI's Intercontinental ("Intercon") Northern Bleached Softwood Kraft ("NBSK") pulp mill was successfully converted to provide slush pulp to its specialty paper facility, formerly supplied by PG.
In addition, the Company made the difficult decision to further restructure its lumber operations in BC, by permanently closing its Chetwynd sawmill and pellet plant and temporarily closing its Houston sawmill. Late in 2023, the Company also announced a fibre-driven indefinite curtailment at its Polar sawmill starting in January 2024.
For 2023, Canfor reported an operating loss of $531.6 million, compared to operating income of $1,074.1 million in 2022. After taking account of adjusting items, including inventory valuation adjustments and an asset write-down and impairment charge in 2022, the Company's adjusted operating loss was $588.8 million for the current year (adjusted shareholder net loss per share of $2.79), compared to adjusted operating earnings of $1,306.2 million for the prior year (adjusted shareholder net income per share of $7.15).
For the fourth quarter of 2023, the Company reported an operating loss of $191.3 million, compared to an operating loss of $65.1 million for the third quarter of 2023. After taking account of adjusting items, largely comprised of inventory valuation adjustments, the Company's adjusted operating loss for the fourth quarter of 2023 was $232.4 million compared to an adjusted operating loss of $85.9 million for the previous quarter, as an improvement in pulp and paper segment earnings quarter-over-quarter was more than offset by a decline in lumber segment results.
Commenting on the Company's 2023 and fourth quarter of 2023 results, Canfor's President and Chief Executive Officer, Don Kayne, said, "It was an extremely challenging year for the Company as ongoing affordability constraints and high global lumber inventory levels put persistent pressure on lumber market conditions throughout the year, including in the fourth quarter. While our global footprint helped mitigate some of these market-related headwinds, our British Columbia operations continued to face ongoing challenges associated with a lack of economically viable fibre in BC. For our pulp business, despite an improved fourth quarter, this was another tough year as relatively weak global pulp market fundamentals were combined with the ongoing cost and operational impacts driven by sustained fibre shortages in BC. We are continuing to adjust our BC operating rates to manage through this challenging period and while, in the near-term, we anticipate these conditions to persist, we continue to believe that longer term lumber market fundamentals remain positive."
Source: Canfor
Legal Notice: Paper Advance is not responsible for the accuracy or availability of content on external websites.
