Overview
- Q3 2022 reported operating income of
$108.6 million ; quarterly sales of$1.7 billion - Downward pressure on global lumber market fundamentals and pricing following highs earlier in the year
- Reduced Western Canadian operating schedules & European seasonal downtime led to lower shipments
- Strong global pulp fundamentals & improved pulp production following capital-related downtime
- Shareholder net income of
$87.4 million , or$0.71 per share
Financial Results
The following table summarizes selected financial information for the Company for the comparative periods:
Q3 | Q2 | YTD | Q3 | YTD | ||||||
(millions of Canadian dollars, except per share amounts) | 2022 | 2022 | 2022 | 2021 | 2021 | |||||
Sales | $ | 1,666.4 | $ | 2,173.1 | $ | 6,053.4 | $ | 1,676.6 | $ | 6,113.6 |
Reported operating income before amortization | $ | 211.5 | $ | 630.3 | $ | 1,672.5 | $ | 425.4 | $ | 2,256.7 |
Reported operating income | $ | 108.6 | $ | 531.6 | $ | 1,382.1 | $ | 331.0 | $ | 1,974.9 |
Adjusted operating income before amortization1 | $ | 300.0 | $ | 630.8 | $ | 1,760.4 | $ | 425.1 | $ | 2,254.2 |
Adjusted operating income1 | $ | 197.1 | $ | 532.1 | $ | 1,470.0 | $ | 330.7 | $ | 1,972.4 |
Net income2 | $ | 87.4 | $ | 373.8 | $ | 995.2 | $ | 210.0 | $ | 1,364.7 |
Net income per share, basic and diluted2 | $ | 0.71 | $ | 3.02 | $ | 8.05 | $ | 1.68 | $ | 10.91 |
Adjusted net income1,2 | $ | 98.5 | $ | 379.7 | $ | 1,007.2 | $ | 209.0 | $ | 1,364.4 |
Adjusted net income per share, basic and diluted1,2 | $ | 0.80 | $ | 3.07 | $ | 8.15 | $ | 1.68 | $ | 10.91 |
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. |
For the third quarter of 2022, the Company reported operating income of
Results in the current quarter include an
Commenting on the Company's third quarter results, Canfor's President and Chief Executive Officer,
Reported results in the lumber segment decreased
In
North American market fundamentals continued to trend downwards throughout much of the current quarter, as rising interest rates alongside high levels of inflation weighed on housing affordability and led to an 11% decrease in US new home construction activity during the period, particularly for single-family units. Despite general economic uncertainty and declines in US housing starts, demand in the North American repair and remodeling sector remained strong throughout the quarter supported by lower-cost building materials and an aged housing stock.
Offshore lumber demand and prices in
Results in the pulp and paper segment largely reflected materially higher NBSK pulp unit sales realizations, and to a lesser extent, a
Following the completion of capital-related downtime in the first half of 2022, pulp production was up 4% from the previous quarter, as NBSK pulp productivity steadily improved as the quarter progressed. Consistent with the prior period, however, NBSK pulp production in the current quarter continued to be limited to available transportation. Concurrently, logistics-related downtime at
Looking ahead, global lumber market fundamentals are anticipated to face significant downward pressure through the balance of 2022. Decreasing housing affordability, tied to persistent inflation and interest rates, is projected to continue to reduce new home construction activity in
As a result of the challenging market conditions, results in the fourth quarter are forecast to reflect the continuation of reduced operating schedules across the Company's Western Canadian sawmills, as well as some reduced shifts at the Company's European operations, which, in the case of
Looking forward, global softwood pulp markets are projected to soften somewhat through the fourth quarter of 2022, reflecting tempered pulp demand, particularly from
Results in the fourth quarter are also anticipated to reflect the continued uncertainties associated with lingering supply chain challenges and the related pressures on CPPI's operations and shipments. As previously disclosed, it is projected that a restart of
CPPI's results in the fourth quarter of 2022 will see the continuation of Intercon's scheduled maintenance outage into October, with an estimated 6,000 tonnes of reduced NBSK pulp production. In addition, NBSK pulp production in the fourth quarter will reflect a temporary curtailment at Intercon due to a lack of available economic fibre (approximately 16,000 tonnes). The current weakness in lumber markets may result in extended sawmill curtailments in the BC Interior, with the risk that lower volumes of sawmill residual chips available to pulp mills may cause further downtime at CPPI's operations. CPPI will continue to closely monitor the supply chain challenges as well as the availability of economically viable chip supply, and will adjust future operating plans accordingly, through the balance of 2022.
Additional Information and Conference Call
A conference call to discuss the third quarter's financial and operating results will be held on
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 condensed consolidated interim financial statements:
(millions of Canadian dollars) | Q3 | Q2 | YTD | Q3 | YTD | |||||||||
2022 | 2022 | 2022 | 2021 | 2021 | ||||||||||
Reported operating income | $ | 108.6 | $ | 531.6 | $ | 1,382.1 | $ | 331.0 | $ | 1,974.9 | ||||
Inventory write-down, net | $ | 88.5 | $ | 0.5 | $ | 87.9 | $ | 3.5 | $ | 1.3 | ||||
Restructuring, mill closure and other items, net | $ | - | $ | - | $ | - | $ | (3.8) | $ | (3.8) | ||||
Adjusted operating income | $ | 197.1 | $ | 532.1 | $ | 1,470.0 | $ | 330.7 | $ | 1,972.4 | ||||
Amortization | $ | 102.9 | $ | 98.7 | $ | 290.4 | $ | 94.4 | $ | 281.8 | ||||
Adjusted operating income before amortization | $ | 300.0 | $ | 630.8 | $ | 1,760.4 | $ | 425.1 | $ | 2,254.2 |
After-tax impact, net of non-controlling interests | Q3 | Q2 | YTD | Q3 | YTD | ||||||||||||
(millions of Canadian dollars) | 2022 | 2022 | 2022 | 2021 | 2021 | ||||||||||||
Net income | $ | 87.4 | $ | 373.8 | $ | 995.2 | $ | 210.0 | $ | 1,364.7 | |||||||
Foreign exchange (gain) loss on term debt | $ | 10.6 | $ | 4.9 | $ | 12.5 | $ | 2.6 | $ | (5.7) | |||||||
(Gain) loss on derivative financial instruments | $ | 0.5 | $ | 1.0 | $ | (0.5) | $ | (0.8) | $ | 8.2 | |||||||
Restructuring, mill closure and other items, net | $ | - | $ | - | $ | - | $ | (2.8) | $ | (2.8) | |||||||
Adjusted net income3 | $ | 98.5 | $ | 379.7 | $ | 1,007.2 | $ | 209.0 | $ | 1,364.4 | |||||||
3 Attributable to equity shareholders of the Company. |
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
© Canada Newswire, source