CANFOR REPORTS RESULTS FOR FIRST QUARTER OF 2024
- Q1 2024 operating loss of
$86 million ; shareholder net loss of$65 million , or$0.54 per share - Sustained pressure on global lumber markets and pricing, especially for Southern
Yellow Pine ("SYP") - Solid earnings from
Europe ; US South results directly impacted by weak SYP lumber pricing; Western Canadian results remained challenging despite uplift inWestern Spruce/Pine /Fir lumber pricing - Modest uptick in NBSK pulp unit sales realizations, 7% increase in pulp production quarter-over-quarter
- Continued execution of the Company's US South growth strategy with the announced agreement to acquire the
El Dorado lumber manufacturing facility inArkansas , as well as plans to optimize the Company'sAlabama operational footprint - Ongoing constraints accessing economically viable fibre in
British Columbia impacting lumber and pulp operating rates in the near-term and through the balance of 2024
The following table summarizes selected financial information for the Company for the comparative periods:
(millions of Canadian dollars, except per share amounts) |
|
|
|
|
|
Q1 |
|
Q4 |
|
Q1 |
|
|
|
|
|
2024 |
|
2023 |
|
2023 |
|
Sales |
$ |
1,382.7 |
$ |
1,282.9 |
$ |
1,385.4 |
||||
Reported operating income (loss) before amortization |
$ |
19.8 |
$ |
(89.1) |
$ |
(105.7) |
||||
Reported operating loss |
$ |
(85.8) |
$ |
(191.3) |
$ |
(208.5) |
||||
Adjusted operating loss before amortization1 |
$ |
(10.4) |
$ |
(130.2) |
$ |
(43.6) |
||||
Adjusted operating loss1 |
$ |
(116.0) |
$ |
(232.4) |
$ |
(146.4) |
||||
Net loss2 |
$ |
(64.5) |
$ |
(117.1) |
$ |
(142.0) |
||||
Net loss per share, basic and diluted2 |
$ |
(0.54) |
$ |
(0.98) |
$ |
(1.17) |
||||
Adjusted net loss1, 2 |
$ |
(52.1) |
$ |
(127.2) |
$ |
(144.9) |
||||
Adjusted net loss per share, basic and diluted1, 2 |
$ |
(0.44) |
$ |
(1.06) |
$ |
(1.20) |
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. |
The Company reported an operating loss of
Commenting on the Company's first quarter results, Canfor's President and Chief Executive Officer,
"For our pulp business" added Kayne, "generally balanced global softwood pulp market conditions and steady pulp production led to a modest uplift in our pulp business results quarter-over-quarter. Our pulp operations, however, continue to navigate a constrained fibre supply environment both in the short and long-term."
For the lumber segment, the adjusted operating loss was
North American lumber market conditions remained under pressure through most of the current quarter. Despite strong underlying fundamentals supported by low inventories of new homes and favourable demographics, prospective homebuyers remained cautious in the current period due to overarching affordability concerns. These factors, combined with weather-related disruptions early in the current quarter, led to a reduction in US residential construction activity quarter-over-quarter. Steady activity, however, in the repair and remodel sector, coupled with the impact of reduced supply stemming from fibre and market-related curtailments, most notably in
US housing starts declined to 1,375,000 units in January as severe winter weather disrupted homebuilding activity. As conditions improved in February, housing starts posted significant gains but dropped again in March, averaging 1,415,000 units on a seasonally adjusted basis for the first quarter of 2024, down 5% from the previous quarter. This decline reflected a 1% increase in single family homes and a 20% decrease in multi-family starts, with the latter mainly driven by an accumulated surplus of multi-family homes under construction, particularly in the US South. In
Offshore lumber demand and pricing in
In
Looking ahead, North American lumber market pricing is projected to experience some weakness through the second quarter of 2024, particularly for SYP. Despite an anticipated seasonal uptick in residential construction activity and the benefit of concessions offered by new home builders, demand is forecast to be challenged by ongoing affordability headwinds in the near-term, especially in the multi-family segment. Demand in the repair and remodeling sector, however, is projected to remain steady through the second quarter of 2024. On the supply side, ongoing fibre and market-related downtime, especially in
Offshore lumber demand and pricing in
In
In the US South, subsequent to quarter-end, in
On the acquisition front, today the Company announced that it has entered into an agreement with
In
For the pulp and paper segment, the adjusted operating loss was
Global softwood pulp markets remained flat through most of the current quarter, principally tied to generally subdued demand, particularly from
Looking forward, global softwood kraft pulp market conditions are anticipated to strengthen somewhat through the second quarter of 2024, largely in response to global pulp supply disruptions, stemming from the transportation labour dispute in
In the second quarter of 2024, maintenance outages are scheduled at CPPI's Intercontinental ("Intercon") pulp mill and at its paper machine, which are projected to reduce NBSK market pulp production by 5,000 tonnes and reduce paper production by 5,000 tonnes.
Given the ongoing uncertainty with regards to the availability of economically viable fibre in BC, and the continued weakness in North American lumber markets, CPPI anticipates a challenging fibre supply environment for its pulp mills (both for sawmill residual chips and whole log chips), through the balance of 2024. CPPI will continue to evaluate its operating conditions and will adjust operating rates at its pulp mills to align with economically viable fibre supply, which will impact CPPI's production, shipments and cost structure. These factors could also affect CPPI's operating plan, liquidity, cash flows and the valuation of long-lived assets.
A conference call to discuss the first 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 www.canfor.com/investor-relations/webcasts.
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) |
|
|
|
|
|
Q1 |
|
Q4 |
|
Q1 |
|
|
|
|
|
2024 |
|
2023 |
|
2023 |
|
Reported operating loss |
$ |
(85.8) |
$ |
(191.3) |
$ |
(208.5) |
||||
Inventory write-down (recovery), net |
$ |
(30.2) |
$ |
(41.1) |
$ |
62.1 |
||||
Adjusted operating loss |
$ |
(116.0) |
$ |
(232.4) |
$ |
(146.4) |
||||
Amortization |
$ |
105.6 |
$ |
102.2 |
$ |
102.8 |
||||
Adjusted operating loss before amortization |
$ |
(10.4) |
$ |
(130.2) |
$ |
(43.6) |
After-tax impact, net of non-controlling interests |
|
|
|
|
|
Q1 |
|
Q4 |
|
Q1 |
(millions of Canadian dollars) |
|
|
|
|
|
2024 |
|
2023 |
|
2023 |
Net loss3 |
$ |
(64.5) |
$ |
(117.1) |
$ |
(142.0) |
||||
Foreign exchange (gain) loss on term debt |
$ |
6.6 |
$ |
(5.3) |
$ |
(0.4) |
||||
(Gain) loss on derivative financial instruments |
$ |
5.8 |
$ |
(4.8) |
$ |
(2.5) |
||||
Adjusted net loss3 |
$ |
(52.1) |
$ |
(127.2) |
$ |
(144.9) |
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 global leader in the manufacturing of high-value low-carbon forest products including dimension and specialty lumber, engineered wood products, pulp and paper, wood pellets and green energy. Proudly headquartered in
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