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Canfor records $87.4 million net income for third quarter

"Downward pressure" on lumber market forecast for fourth quarter

Canfor Corp. reported Thursday $87.4 million net income or 71 cents per share for its latest quarter.

The outcome represents a continued slide in the lumber and pulp producer's performance after registering first quarter net income of $534 million and second quarter net income of $373.8 million. 

For the third quarter of 2022 the Vancouver-based company reported operating income of $108.6 million, down $423 million from the operating income of $531.6 million reported for the second quarter of 2022, largely reflecting a decline in lumber segment earnings, slightly offset by improved pulp and paper segment results.

Adjusted profit growth also fell, from $379.7 million or $3.07 per share in Q2 to  $98.5 million or 80 cents per share in Q3. By comparison, in third quarter of 2021 Canfor earned $209 million or $1.68 per share.

Year-to-date, net income for 2022 sits at $995 million, compared to $1.36 billion by the same point last year.

“As global lumber market conditions continued to soften from the highs earlier in the year, our lumber business delivered solid results in the quarter, largely reflecting the benefit of our global diversification strategy," CEO Don Kayne said in the report. 

"However, the steep declines in global lumber pricing, combined with high log costs in British Columbia, led to the difficult decision to extend reduced operating schedules at our Western Canadian sawmills.

"For our pulp business, our focus on enhancing operational performance and improving reliability while managing persistent supply chain and fibre-related challenges allowed us to realize high Northern Bleached Softwood Kraft  pulp list prices and recognize improved results in the quarter.

"While we continue to monitor the current external challenges facing our lumber and pulp businesses, including the fibre situation in B.C., we greatly appreciate our employees’ continued efforts in navigating through these difficult conditions.” 

Looking ahead, "downward pressure" on the lumber market is forecast due to "decreasing housing affordability, tied to persistent inflation and interest rates."

As a result reduced operating schedules across the company’s Western Canadian sawmills, as well as some reduced shifts at the company’s European operations, are expected.

Likewise, global softwood pulp markets are projected to soften somewhat through the fourth quarter, reflecting tempered pulp demand, particularly from China.

"As previously disclosed, it is projected that a restart of Taylor will not be contemplated until such time as there is a return to more normal transportation service levels to all of CPPI’s pulp and paper mills," the company said.

On Wednesday, West Fraser Timber reported earnings of $216 million, or $2.50 per diluted share, on sales of $2.1 billion, down from $762 million, or $7.59 per diluted share on $2.9 billion for the second quarter.