Reflecting weak global market conditions and a challenging fibre cost environment in British Columbia (“BC”), Canada, for the 3Q 2019, Canfor Corporation reported an operating loss of $124 million compared to an operating loss of $49.7 million reported for the 2Q 2019. The material decline reflected significantly lower operating earnings in both the lumber and pulp and paper segments, and substantial curtailments taken by both businesses during the 3Q, as the company says in the press release.
Reported results for the 3Q 2019 included a net duty expense of $53.5 million, at a combined countervailing duty (“CVD”) and anti-dumping duty (“ADD”) accrual rate of 29.24%, compared to $45.2 million reported in the 2Q 2019 at a combined rate of 26.24%.
Results in the 3Q 2019 also included a net $5.3 million recovery in the lumber and log inventory write-down provisions, as well as restructuring costs of $6.4 million related to the previously announced permanent capacity reductions and indefinite curtailments at the Vavenby, Mackenzie and Isle Pierre sawmills.
“The ongoing tough market conditions made for another extremely challenging quarter for our Western SPF business and all of our employees” said Don Kayne, Canfor’s President and CEO. “However, despite the global lumber market challenges, our SYP and European businesses continued to deliver positive results in the 3Q and we expect that to continue through the balance of the year. Our pulp business also had a very difficult quarter, as deteriorating pulp market conditions and reduced fibre supply resulted in significant pulp mill curtailments in the 3Q. We expect to see stabilization and a slow recovery in both lumber and pulp prices towards the end of 2019 and into 2020 as demand steadily improves and global inventory levels come back into balance.”
Canfor is a leading integrated forest products company based in Vancouver, BC with interests in BC, Alberta, North and South Carolina, Alabama, Georgia, Mississippi and Arkansas, as well as in Sweden with its recent majority acquisition of the Vida Group. Canfor produces primarily softwood lumber.