Canfor (CFP) Q4 2023 earnings summary

Executive summary

• Q4 shareholder net loss was $117.1 million, or $0.98 per share; adjusted net loss was $127.2 million, or $1.06 per share, after excluding $10.1 million of net favorable non-operating items.

• FY2023 operating loss was $531.6 million and shareholder net loss was $326.1 million, or $2.71 per share.

• Weak global lumber markets and persistent BC fibre constraints weighed on results; Q4 lumber losses deepened while pulp results and production improved.

Financial highlights

• Q4 sales were $1,282.9 million, versus $1,312.3 million in Q3 and $1,373.3 million in Q4 2022.

• Q4 reported operating loss was $191.3 million versus $65.1 million in Q3; adjusted operating loss was $232.4 million versus $85.9 million.

• FY2023 sales were $5,426.6 million versus $7,426.7 million in FY2022; adjusted operating loss was $588.8 million versus adjusted operating income of $1,306.2 million.

• FY2023 operating cash flow was $154.7 million; year-end cash and equivalents were $627.4 million, down from $1,268.7 million a year earlier.

Outlook and guidance

• Global lumber conditions were expected to remain pressured through Q1 2024 amid affordability challenges and slightly lower repair-and-remodel demand; longer-term fundamentals were supported by housing needs and low new-home inventories.

• BC fibre constraints and log cost pressure were expected to persist; operating rates would be adjusted to demand and economically viable timber supply.

• Softwood kraft pulp markets were projected to be subdued in Q1 2024, with mill rates adjusted to available economically viable fibre.

• Preliminary POR5 duties were expected to result in a $58.8 million expense upon finalization, anticipated in Q3 2024; the combined cash deposit rate was expected to reset to 15.79%.