VANCOUVER, BC, Oct. 25, 2024 - Canfor Corporation ("The Company" or "Canfor") (TSX: CFP) today reported its third quarter of 2024 results:
Overview.
- Q3 2024 operating loss of $560 million, including a $311 million asset write-down and impairment charge as well as other one-time items1; shareholder net loss of $350 million, or $2.96 per share.
- After taking into consideration adjusting and one-time items1, Q3 2024 operating loss of $139 million, compared to a similarly adjusted operating loss of $135 million in Q2 2024.
- Persistent pressure on North American lumber markets and pricing, especially in US South; positive results from Alberta and Europe.
- Ongoing North American lumber market weakness, high duties and persistent challenges accessing economic fibre led to the announcement of sawmill closures in British Columbia and, as a result, an asset write-down and impairment charge of $100 million in the lumber segment.
- Proceeds of $314 million received in relation to duty deposits loan agreement.
- Modest improvement in NBSK pulp unit sales realizations driven by steady North American pulp pricing through most of the third quarter and favourable timing lag in shipments, despite weak demand in China; fibre-driven asset write-down and impairment charge of $211 million in the pulp segment.
For the third quarter of 2024, the Company reported an operating loss of $559.7 million, compared to an operating loss of $250.8 million in the second quarter of 2024.
During the current period, the Company's British Columbia ("BC") operations continued to encounter operational challenges, including limited access to economic fibre, weak lumber market conditions, rising operating costs, increased export tariffs to the United States ("US"), as well as various regulatory complexities. After a thorough review of these operational constraints, the Company made the difficult decision to permanently close its Plateau and Fort St. John operations located in northern BC, following an orderly wind down in the fourth quarter of 2024. In connection with these closures, in the third quarter of 2024 the Company recognized an asset write-down and impairment charge of $100.3 million to reduce the carrying value of its lumber segment assets, as well as $38.6 million in restructuring costs.
Recognizing the impact of these recent closures, along with the fibre effects of previously announced reductions and curtailments across the industry in the BC Interior, Canfor Pulp Products Inc. ("CPPI") recorded an asset write-down and impairment charge of $211.0 million in the same period, as a reduction to the carrying value of its pulp segment assets.
Commenting on the Company's third quarter results, Canfor's President and Chief Executive Officer, Don Kayne, said, "This was another extremely challenging quarter for our lumber business. While Alberta and Europe delivered positive results, our North American operations continued to face a persistently weak pricing environment. In BC, this depressed pricing was exacerbated by a complex operating environment, high costs, rising US tariffs and ongoing difficulties in reliably accessing sufficient economic fibre. These conditions have resulted in unsustainable financial losses from our BC operations. As a result, we made the very difficult decision to close both our Plateau and Fort St. John operations in northern BC by the end of 2024. We sincerely regret the impact these decisions have on our employees, their families, contractors, and the businesses that support our operations and the local community."
"For our pulp business," added Kayne, "we also continue to face persistent fibre-related constraints, however, during the current quarter, our business had improved adjusted operating results, benefiting from an uplift in pulp unit sales realizations."
Source: Canfor