GreenFirst Forest Products Inc. reported net sales from continuing operations of $103.2 million during Q4 2023, an increase of $7.5 million or 8%, compared to Q3 2023. The increase in net sales was primarily due to higher volumes shipped as a result of increased demand driven by positive macroeconomic indicators for housing, along with central banks being committed to holding interest rates. This was partially offset by lower lumber pricing, as prices in Q3 2023 were higher as a result of forest fire related disruptions. Paper segment sales also increased due to higher volumes but partially offset by the continued decline in paper pricing.
The Company reported cost of sales of $115.7 million during Q4 2023, an increase of $26.0 million or 29%, compared to Q3 2023. This increase reflected the impact of higher lumber and paper shipments in Q4 2023 along with higher charges related to inventory net realizable value recorded and higher maintenance costs at the Kapuskasing paper mill.
Q4 2023 net loss from continuing operations was $21.6 million or $0.12 per share (diluted), compared to net earnings of $2.7 million or earnings of $0.01 per share (diluted) in the Q3 2023. For fiscal 2023, net loss from continuing operations was $48.8 million or $0.27 per share (diluted), compared to a net loss of $4.1 million or $0.02 per share (diluted) in 2022 on the same basis.
The Company reported selling, general and administration expenses for continuing operations of $5.7 million during Q4 2023 which was an increase of $0.7 million compared to Q3 2023. This was primarily due to the prior quarter being impacted by credits related to recoveries on fringe benefits.
“Despite ongoing pricing pressures in the Q4, we are starting to see some positive momentum in lumber markets at the beginning of 2024,” said Paul Rivett, GreenFirst’s Executive Chair. “This coupled with an enhanced operational focus with Joel at the helm are factors that bode well for GreenFirst’s resiliency in the current environment. On the paper side we expect productivity gains and a better cost profile with Terry’s tenacious focus on operations, along with his many years of experience in this area.”
Outlook
High interest rates, macroeconomic concerns and tensions in Middle East and Europe continue to negatively impact lumber demand and pricing. The positive impact on new home builds in the US, due to lack of activity in the resale market, has also subsided as affordability continues to be negatively impacted by higher interest rates. However, there is indication from the US Federal Reserve and Bank of Canada for interest rate cuts in 2024, which could positively impact lumber demand.
In the longer-term, lack of available housing inventory, record levels of immigration in Canada, aging of homes in the US and demographic driven demand are expected to positively impact lumber markets.
Despite continued curtailment of lumber production in British Columbia and some other regions of North America, short-term pricing benefits have not been material. Reduced lumber demand and low inventory maintenance continue to balance out supply side pressures in the short-term. However, these curtailments may provide a positive effect in the long-term.
GreenFirst Forest Products is a forest-first business, focused on sustainable forest management and lumber production.
