Canfor Corporation reported an operating loss of CA$86 million for the first quarter of 2024, a significant improvement from a loss of CA$191 million in the previous quarter. Despite challenging conditions in global lumber markets, particularly for Southern Yellow Pine, the company's diverse geographic operations helped mitigate losses, with solid earnings from European segments.
First quarter sales totaled CA$1,383 million, a slight decrease from CA$1,385 million in the same period last year. Net loss for shareholders was CA$65 million, compared to a net loss of CA$142 million in Q1 2023, showing a narrowing of losses year-over-year.
Canfor's President and CEO, Don Kayne, highlighted the benefits of the company's global diversification strategy, particularly the positive impact from European operations and some recovery in Western Canadian sectors. The acquisition of the El Dorado sawmill in Arkansas and optimization of Alabama operations are expected to further support the company's growth strategy in the US South.
The company also reported a 7% quarter-over-quarter increase in pulp production and a modest uptick in NBSK pulp unit sales realizations. However, constraints in accessing economically viable fibre in British Columbia continue to pose challenges to lumber and pulp operating rates.
Looking ahead, Canfor anticipates challenges in North American lumber market pricing through the second quarter of 2024, particularly for Southern Yellow Pine (SYP), due to persistent affordability issues. Seasonal improvements in residential construction are expected, but demand may be dampened, especially in the multi-family segment. The repair and remodeling sector is projected to maintain steady demand.
Supply constraints, particularly in Western Canada, are likely to keep inventories at balanced levels. In the international markets, Asia is expected to see some improvement in lumber demand and pricing due to government stimulus measures, especially in Japan, and a gradual reduction of lumber inventories.
In Europe, slight improvements in lumber market pricing are forecasted for the second quarter of 2024, driven by steady activity in the do-it-yourself sector and ongoing lumber supply constraints. These include challenges related to reduced log availability and rising log costs.
Post-quarter, Canfor announced the closure of its facility in Jackson, Alabama, and plans for a production increase at its Fulton, Alabama facility. These changes aim to consolidate operations at modern facilities better equipped for long-term competitiveness. Additionally, Canfor's acquisition of the El Dorado lumber manufacturing facility in Arkansas is expected to boost its annual SYP lumber capacity by 175 million board feet following planned upgrades.
