Canfor Pulp Products (CFX) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw significant operating losses, including a $336 million loss in lumber and a $209.3 million loss in pulp, driven by asset write-downs, impairments, and duty expenses, with closures of Plateau and Fort St. John operations in Northern B.C. removing up to one billion board feet of annual capacity.

• Adjusted net loss was $194.7 million, reflecting $311 million in asset impairments and duty-related charges.

• New sawmill in Axis, Alabama began production, Urbana upgrade project ramping up, and Iron Mountain mill in Arkansas was acquired.

• The wind down of one Northwood NBSK pulp mill line was completed in August, reducing annual market kraft pulp production by about 300,000 tonnes.

Financial highlights

• Gross sales declined to $1,202.9 million from $1,381.5 million sequentially; Q3 2024 sales for pulp were $193.2 million, down from $220.0 million in Q2 2024.

• Lumber business recorded an operating loss of $336 million, including a $100 million asset write-down and $121 million in non-cash duty-related adjustments.

• Canfor Pulp reported an operating loss of $209.3 million, including a $211 million asset write-down; adjusted operating income was $1.7 million, up $7.3 million from Q2.

• Net book value of B.C. Lumber and Pulp assets reduced by approximately $311 million due to closures and reduced fiber supply.

• Cash from operating activities was $31.5 million, up from $18.1 million in Q2 2024.

Outlook and guidance

• Persistent weakness in North American lumber markets, high duties, and fibre supply challenges are expected to continue impacting results, but a slight improvement in global softwood pulp market conditions is anticipated in Q4 2024 as Chinese demand recovers.

• Q4 2024 will reflect the full impact of the Northwood line wind down, reducing annual pulp production by about 300,000 tonnes.

• Capital expenditures in Lumber expected to drop to $250–300 million in 2025 from $450 million in 2024; Pulp capital spend forecasted below $50 million in 2025.