Canfor Pulp Reports Results for the Third Quarter of 2024
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For the third quarter of 2024, the Company reported an operating loss of $209.3 million, including an asset write-down and impairment charge totaling $211.0 million within its pulp segment.
In recent years, the Company, like other pulp producers in central and northern British Columbia ("BC"), has experienced a significant reduction in the supply of sawmill residual chips driven by extensive temporary and permanent sawmill curtailments and closures in the region. In response to these fibre constraints, the Company has taken several actions including securing additional fibre supply, prioritizing discretionary capital spending to maximize fibre utilization and recovery, as well as making rationalization decisions with respect to the Company's operating footprint. Notably, the Company permanently closed the pulp line at its Prince George pulp and paper mill in early 2023, and more recently, completed the wind down of one production line at the Company's Northwood Northern Bleached Softwood Kraft ("NBSK") pulp mill ("Northwood") in August. Collectively, these curtailments reduce the Company's annual market kraft pulp production by approximately 580,000 metric tons.
During the third quarter of 2024, these fibre challenges were further exacerbated by additional sawmill closure announcements in the BC Interior, which were in response to weak lumber market conditions, upcoming increases in US tariffs on lumber exports and various regulatory complexities. As a result, the reduction in fibre supply as well as the ongoing uncertainty surrounding economic fibre availability continue to impact the Company and consequently, an asset write-down and impairment charge of $211.0 million was recognized in the third quarter of 2024, as a reduction to the carrying value of the Company's pulp segment assets.
After adjusting for the asset write-down and impairment charge, the Company's operating income for the third quarter of 2024 was $1.7 million, a $7.3 million improvement compared to the second quarter of 2024. Despite some moderation in US-dollar pulp list prices to China during the current quarter, the Company's results largely reflected modestly higher NBSK pulp unit sales realizations, offset in part by reduced pulp production and shipment volumes in the period following the successful wind down of one production line at Northwood in August 2024.
Commenting on the Company's third quarter of 2024 results, CPPI's President and Chief Executive Officer, Kevin Edgson, said, "The Company continues to face persistent challenges accessing economic fibre, the results of which led to another curtailment of our operations this quarter. These decisions weigh heavily on our results, as well as our employees, their families and the local communities. Despite these challenges, our business realized improved adjusted operating earnings this quarter, and we executed a safe, smooth and efficient wind down of one line at Northwood."
