Canfor Pulp Products (CFX) Q4 2023 earnings summary

Executive summary

• Q4 results weakened QoQ, with reported operating losses in lumber and pulp and paper; adjusted results exclude comparability items.

• 2023 operating loss was $127.5 million and net loss was $96.1 million, amid weak pulp markets, BC fibre shortages and operating-cost pressures.

• Q4 pulp production rose 20% QoQ, while adjusted operating loss improved to $26.0 million from $51.3 million in Q3.

Financial highlights

• Gross sales were $1,282.9 million, down from $1,312.3 million in Q3 2023.

• Q4 shareholder net loss was $117.1 million reported and $127.2 million adjusted, or $0.98 and $1.06 per share; a separate Q4 results report gives net loss of $13.2 million, or $0.20 per share.

• Total operating loss was $191.3 million reported and $232.4 million adjusted; Q4 reported pulp operating loss was $15.1 million versus $91.1 million YoY.

• Q4 pulp sales were $193.9 million versus $268.1 million YoY; FY sales were $875.5 million versus $1,085.6 million.

Outlook and guidance

• Preliminary POR5 duty rates imply a combined CVD and ADD expense of $58.8 million upon finalization, anticipated in Q3 2024; cash duties will not be refunded until litigation is settled.

• Global softwood kraft pulp markets are expected to remain subdued in Q1 2024 amid demand uncertainty and seasonally slower spring activity in China.

• BC fibre supply is expected to remain challenging; mill operating rates will be adjusted to available economically viable fibre.

• Bleached kraft paper markets are projected to remain solid in Q1; planned Q2 Intercontinental and paper-machine outages are expected to reduce NBSK and paper production by 5,000 tonnes each.