Canfor reports results for the fourth quarter of 2024
Canfor reports results for the fourth quarter of 2024 |
| [06-March-2025] |
VANCOUVER, BC, March 6, 2025 /CNW/ - Canfor Corporation ("The Company" or "Canfor") (TSX: CFP) today reported its fourth quarter of 2024 results: Overview.
Financial results. The following table summarizes select financial information for the Company for the comparative periods:
Commenting on the Company's fourth quarter of 2024 results, Canfor's President and Chief Executive Officer, Susan Yurkovich, said, "Following several quarters of very weak global lumber market conditions, we were pleased to see a slight uplift in North American benchmark lumber prices during the fourth quarter, which gave rise to improved results across all our lumber operating regions. While we anticipate subdued yet volatile market conditions to persist in the near-term, we continue to believe that longer term lumber market fundaments remain solid. Operationally, with our geographically diverse platform, we are well-positioned to navigate external challenges facing our lumber business, including the tariffs and increased duties on imports from Canada into the US." "For our pulp business," Yurkovich added "despite a slight improvement in market conditions late in the quarter, which resulted in an uplift in results, we continue to face external obstacles driven by persistent shortages in the availability of economic fibre in BC." Fourth quarter adjusting and one-time items. For the fourth quarter of 2024, the Company reported an operating loss of $45.9 million, compared to an operating loss of $559.7 million for the third quarter of 2024. After taking account of adjusting and one-time items, as outlined in the table below, the Company's operating loss for the fourth quarter of 2024 was $76.5 million compared to a similarly adjusted operating loss of $138.9 million for the previous quarter. These results primarily reflect an improvement in earnings for the lumber segment, and to a lesser extent, the pulp and paper segment.
Fourth quarter lumber segment highlights. For the lumber segment, the operating loss was $36.6 million for the fourth quarter of 2024, compared to the previous quarter's operating loss of $336.2 million. After taking account of adjustments and other one-time items, the lumber segment operating loss was $67.8 million, compared to a similarly adjusted operating loss of $128.5 million in the prior quarter. These results principally reflected improved results from the Company's North American operations combined with another quarter of solid earnings from its European operations. The former was largely driven by an uptick in most North American lumber benchmark prices towards the end of the current quarter and a 2 cent, or 3%, weaker Canadian dollar (versus the US-dollar). This slight improvement in market conditions was combined with the benefit of higher production and shipments in Europe and Western Canada following seasonal and market-related downtime taken, respectively, in the previous quarter. North American lumber markets saw a modest improvement in the fourth quarter of 2024. While affordability concerns persisted, a quarter-over-quarter decline in interest rates contributed to a slight uptick in US residential construction activity. The repair and remodeling sector remained steady during the period. This subtle improvement in demand was coupled with reduced supply due to fibre shortages and market-related curtailments in both the US South and Western Canada and led to a rise in North American benchmark prices in the current quarter. Offshore lumber markets in Asia saw improved pricing during the current quarter, despite continued low demand. In China, reduced imports from Russia and lower volumes from Europe, due largely to the impact of the spruce beetle, led to supply pressure in the region, resulting in some price appreciation. Similarly, Japan experienced fewer imports from Europe, impacted by both the spruce beetle supply constraints and geopolitical logistics challenges, contributing to a quarter-over-quarter improvement in pricing in that region. In Europe, lower interest rates and easing inflation provided a small improvement in affordability, leading to a slight increase in residential construction activity during the current quarter. However, demand in the repair and remodeling sector weakened during the fourth quarter. As a result, overall European demand, and therefore market pricing, was fairly muted quarter-over-quarter. Lumber segment outlook. Looking ahead, continued volatility in global lumber market conditions is anticipated through the first half of 2025 despite longer-term underlying fundamentals remaining solid. In North America, affordability constraints combined with broader economic and political uncertainty are projected to weigh on demand for both new home construction and repair and remodeling activity in the short-term. On the supply side, permanent mill closures, particularly in Western Canada, along with fibre and market-related curtailments, are anticipated to give rise to some modest pricing improvement through the first quarter and into the second quarter of 2025. Subsequent to year-end, in March 2025, the preliminary anti-dumping results for the sixth period of review ("POR6") were announced, which indicated that the Company's anti-dumping duty ("ADD") rate for 2023 was 34.61%. Upon finalization of this rate (anticipated in the third quarter of 2025), the Company's current combined cash deposit rate of 16.58% will be reset to 40.75% (based on this preliminary ADD rate determination of 34.61% combined with the Company's current countervailing duty ("CVD") cash deposit rate of 6.14%). In addition, the US Department of Commerce ("DOC") is anticipated to release preliminary countervailing results for POR6 on or before May 2025, which are anticipated to further impact the Company's combined cash deposit rate later in 2025. In addition, in March 2025, US tariffs of 25% have been imposed on Canadian goods and these tariffs will be in addition to the pre-existing CVD and ADD. There is also the potential that further tariffs may be imposed on Canadian forest product imports into the US going forward. With a diversified operating platform in the US South and Sweden, in addition to Canada, the Company is well-positioned to mitigate some of these costs. However, actual and potential tariffs do present challenges for the Company's Canadian operations, and, as result, the Company is continuing its strategy of refocusing those products on domestic markets, particularly in Western Canada, and strengthening its presence in offshore markets. The subdued offshore lumber market conditions in China experienced in the fourth quarter of 2024 are projected to persist through the first quarter of 2025, with continuing headwinds from a depressed real estate sector as the benefits of new government policies remain slow to materialize. In Japan, modest improvement in the multi-family rental and non-residential sectors, coupled with lower import volumes, are anticipated to tighten supply and support a modest uplift in pricing. In Europe, lumber pricing is forecast to gain some upward momentum in the first quarter of 2025, largely driven by supply constraints in the region following the impact of the spruce beetle, while demand is projected to remain relatively soft, despite some modest improvements in affordability in the region. In BC, despite the Company's recent changes with regards to its operating footprint, it is anticipated that this region will continue to face challenging operating conditions especially with respect to the availability of economically viable fibre and high duties on lumber shipments to the US. Fourth quarter pulp and paper segment highlights. For the pulp and paper segment, CPPI reported operating income of $4.1 million for the fourth quarter of 2024, compared to an operating loss of $209.3 million for the third quarter of 2024. After taking account of adjusting items, including an asset write-down and impairment charge in the prior period, CPPI's adjusted operating income improved $2.4 million compared to an adjusted operating income for the third quarter of 2024 of $1.7 million. Notwithstanding the decline in adjusted results from its pulp operations in the current period, principally due to the full quarter impact of the one line curtailment at Northwood on pulp production, shipments and costs, the improvement in operating income for CPPI as a whole, largely reflected a moderate uplift in paper unit sales realizations, particularly to North American markets, combined with an increase in paper production quarter-over-quarter. Global softwood pulp market fundamentals remained relatively flat through the fourth quarter of 2024, following a moderate decline in the preceding quarter. However, later in the period, global demand and purchasing activity experienced some positive momentum as producers worked to reduce their higher-than-average inventory levels. Global softwood pulp producer inventories ended December 2024 at 42 days of supply, a decline of 7 days compared to September 2024. Consequently, US-dollar NBSK list prices to China, the world's largest pulp consumer, saw a slight increase towards the end of the current quarter, ending December at US$770 per tonne. Despite this late improvement, for the current quarter overall, US-dollar NBSK pulp list prices to China averaged US$767 per tonne, down US$4 per tonne, or 1%, from the prior quarter. Pulp and paper segment outlook. Looking forward, global softwood pulp market conditions and pricing are projected to improve through the balance of the first quarter and into the second quarter of 2025, as global supply dynamics adjust to new hardwood capacity and as pulp producer inventories normalize. On the demand side, steady Chinese demand is anticipated to absorb these changes in supply. CPPI, like Canfor, continues to monitor the trade situation between Canada and the US and mitigation plans are underway to mostly offset the impact of the tariffs on US shipments. CPPI remains focused on optimizing its operating footprint, enhancing operational reliability as well as closely managing manufacturing and fibre costs. Looking forward, there remains significant uncertainty with regards to the availability of economically viable fibre within BC. As a result, CPPI continues to anticipate that escalating log cost pressures and transportation costs in BC, along with the impacts of higher softwood lumber duties later this year will translate into a higher cost fibre supply for its pulp mills (both for sawmill residual chips and whole log chips). CPPI will continue to evaluate operating conditions and adjust operating rates at its pulp mills to align with economically viable fibre supply. These factors could also affect CPPI's operating plan, liquidity, cash flows and the valuation of long-lived assets. Refer to the Company's annual Management's Discussion and Analysis for further discussion on the Company's results for the fourth quarter of 2024 on page 24. Additional information and conference call. A conference call to discuss the third quarter's financial and operating results will be held on Friday, March 7, 2025, at 8:00 AM Pacific time. To participate in the call, please dial Toll-Free 1-888-510-2154. For instant replay access until March 21, 2025, please dial Toll-Free 1-888-660-6345 and enter participant pass code 93758#. 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. 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 Accounting Standards and may not be directly comparable with similarly titled measures used by other companies. 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. About Canfor Corporation. 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 Vancouver, British Columbia, Canfor produces renewable products from sustainably managed forests, at more than 50 facilities across its diversified operating platform in Canada, the United States and Europe. The Company has a 77% stake in Vida AB, one of Sweden's largest sawmilling companies, and also owns a 54.8% interest in Canfor Pulp Products Inc. Canfor shares are traded on The Toronto Stock Exchange under the symbol CFP. For more information visit canfor.com. SOURCE Canfor Corporation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company Codes: Toronto:CFP | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
