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
Financial Results
The following table summarizes selected financial information for the Company for the comparative periods:
Q4 | Q3 | YTD | Q4 | YTD | ||||||
(millions of Canadian dollars, except per share amounts) | 2023 | 2023 | 2023 | 2022 | 2022 | |||||
Sales | $ | 1,282.9 | $ | 1,312.3 | $ | 5,426.6 | $ | 1,373.3 | $ | 7,426.7 |
Reported operating income (loss) before | $ | (89.1) | $ | 42.6 | $ | (111.2) | $ | (62.6) | $ | 1,609.9 |
Reported operating income (loss) | $ | (191.3) | $ | (65.1) | $ | (531.6) | $ | (308.0) | $ | 1,074.1 |
Adjusted operating income (loss) before | $ |
(130.2) | $ |
21.8 | $ |
(168.4) | $ | (57.0) | $ | 1,703.4 |
Adjusted operating income (loss)1 | $ | (232.4) | $ | (85.9) | $ | (588.8) | $ | (163.8) | $ | 1,306.2 |
Net income (loss)2 | $ | (117.1) | $ | (23.1) | $ | (326.1) | $ | (207.9) | $ | 787.3 |
Net income (loss) per share, basic and diluted2 | $ | (0.98) | $ | (0.19) | $ | (2.71) | $ | (1.70) | $ | 6.39 |
Adjusted net income (loss)1,2 | $ | (127.2) | $ | (19.4) | $ | (335.8) | $ | (126.8) | $ | 880.4 |
Adjusted net income (loss) per share, basic and | $ | (1.06) | $ | (0.16) | $ | (2.79) | $ | (1.04) | $ | 7.15 |
1 Adjusted results referenced throughout this news release are defined as non-IFRS financial measures. For further details, refer to the "Non-IFRS Financial Measures" section of this document. |
2 Attributable to equity shareholders of the Company. |
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
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
In
In addition, the Company made the difficult decision to further restructure its lumber operations in BC, by permanently closing its
For 2023, Canfor reported an operating loss of
For the fourth quarter of 2023, the Company reported an operating loss of
Commenting on the Company's 2023 and fourth quarter of 2023 results, Canfor's President and Chief Executive Officer,
Fourth Quarter Lumber Segment Highlights
For the lumber segment, the adjusted operating loss was
North American lumber market conditions remained fairly subdued throughout most of the fourth quarter as the market softness experienced at the end of the prior quarter continued well into the current period. This, combined with a traditionally slower consumption period, placed further downward pressure on North American benchmark pricing early in the current quarter. However, an unanticipated uptick in housing starts, coupled with the impact of production curtailments, particularly in BC, and steady activity in the repair and remodel sector, gave rise to a slight improvement in North American benchmark pricing towards the end of the current period.
Offshore lumber markets in
In
Lumber Segment Outlook
Looking ahead, global lumber market conditions are anticipated to remain under pressure through the first quarter of 2024, as near-term challenges of affordability are projected to persist, despite recent declines in mortgage rates in the US. On the supply side, it is forecast that operational disruptions, driven by geopolitical tensions as well as fibre and market-related curtailments, especially in
Offshore lumber demand in
In
From an operational perspective, there remains significant uncertainty with regards to the availability of economically viable fibre in BC. While the Company has taken a number of actions in recent years in response to these fibre constraints, including the aforementioned closures and capacity reductions, the near-term fibre outlook in BC remains challenging. The Company continues to anticipate sustained log cost pressures and persistent constraints accessing economically viable fibre in BC for its sawmills, as well as a challenging fibre supply environment for CPPI's pulp mills. With these continued fibre-related pressures and the projected weaker North American lumber market demand and pricing in the near-term, the Company will continue to adjust operating rates in BC to align with demand and economically available timber supply.
Fourth Quarter Pulp and Paper Segment Highlights
For the pulp and paper segment, the adjusted operating loss was
Following a relatively weak second and third quarter of 2023, global softwood pulp markets moderately improved in the current quarter, largely reflecting a slight uptick in demand and purchasing activity in most major regions as global pulp producer inventories returned to a more balanced range, ending
Upon the successful completion of a scheduled maintenance outage in September, the restart of CPPI's Northwood NBSK pulp mill ("Northwood") was delayed into the fourth quarter of 2023, resulting in reduced NBSK pulp production early in the current period. For the quarter overall however, the operating performance at Northwood and Intercon continued to improve as the quarter progressed, resulting in a 20% increase in pulp production in the current period.
Pulp and Paper Segment Outlook
Looking forward, global softwood kraft pulp markets are projected to be fairly subdued through the first quarter of 2024. While global pulp producer inventories are estimated to remain within the balanced range, demand uncertainty is anticipated, driven principally by the deceleration in
While no major maintenance outages are planned at CPPI's operations in the first quarter of 2024, given the ongoing uncertainty with regards to the availability of economically viable fibre in BC, and a projected weak North American lumber market, CPPI anticipates a challenging fibre supply environment for its pulp mills (both for sawmill residual chips and whole-log chips), especially in the near-term. CPPI will continue to monitor operating conditions and will adjust operating rates at its pulp mills to align with economically viable fibre supply.
Refer to the Company's annual Management's Discussion and Analysis for further discussion on the Company's results for the fourth quarter of 2023 on page 25.
Additional Information and Conference Call
A conference call to discuss the fourth quarter's financial and operating results will be held on
The conference call will be webcast live and will be available at www.canfor.com. This news release, the attached financial statements and a presentation used during the conference call can be accessed via the Company's website at http://www.canfor.com/investor-relations/webcasts.
Non-IFRS Financial Measures
Throughout this press release, reference is made to certain non-IFRS financial measures which are used to evaluate the Company's performance but are not generally accepted under IFRS and may not be directly comparable with similarly titled measures used by other companies.
The following table provides a reconciliation of these non-IFRS financial measures to figures reported in the Company's consolidated financial statements:
Q4 | Q3 | YTD | Q4 | YTD | ||||||
(millions of Canadian dollars) | 2023 | 2023 | 2023 | 2022 | 2022 | |||||
Reported operating income (loss) | $ | (191.3) | $ | (65.1) | $ | (531.6) | $ | (308.0) | $ | 1,074.1 |
Asset write-downs and impairments | $ | - | $ | - | $ | - | $ | 138.6 | $ | 138.6 |
Inventory write-down (recovery), net | $ | (41.1) | $ | (20.8) | $ | (57.2) | $ | 5.6 | $ | 93.5 |
Adjusted operating income (loss)3 | $ | (232.4) | $ | (85.9) | $ | (588.8) | $ | (163.8) | $ | 1,306.2 |
Amortization | $ | 102.2 | $ | 107.7 | $ | 420.4 | $ | 106.8 | $ | 397.2 |
Adjusted operating income (loss) before | $ | (130.2) | $ | 21.8 | $ | (168.4) | $ | (57.0) | $ | 1,703.4 |
After-tax impact, net of non-controlling interests | Q4 | Q3 | YTD | Q4 | YTD | |||||
(millions of Canadian dollars) | 2023 | 2023 | 2023 | 2022 | 2022 | |||||
Net income (loss)3 | $ | (117.1) | $ | (23.1) | $ | (326.1) | $ | (207.9) | $ | 787.3 |
Foreign exchange (gain) loss on term debt | $ | (5.3) | $ | 6.4 | $ | (6.0) | $ | (1.7) | $ | 10.8 |
Gain on derivative financial instruments | $ | (4.8) | $ | (2.7) | $ | (3.7) | $ | (2.0) | $ | (2.5) |
Asset write-downs and impairments | $ | - | $ | - | $ | - | $ | 84.8 | $ | 84.8 |
Adjusted net income (loss)3 | $ | (127.2) | $ | (19.4) | $ | (335.8) | $ | (126.8) | $ | 880.4 |
3 Attributable to equity shareholders of the Company. |
Forward Looking Statements
Certain statements in this press release constitute "forward-looking statements" which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Words such as "expects", "anticipates", "projects", "intends", "plans", "will", "believes", "seeks", "estimates", "should", "may", "could", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and actual events or results may differ materially. There are many factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements. Forward-looking statements are based on current expectations and Canfor assumes no obligation to update such information to reflect later events or developments, except as required by law.
Canfor is a leading integrated forest products company based in
SOURCE
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