Interfor Corporation has unveiled plans to indefinitely curtail operations at its Philomath, Oregon sawmill, while also implementing temporary production cuts in British Columbia. The decision reflects the impact of high log costs and challenging market conditions on the lumber industry.
The Philomath sawmill, which produces a mix of kiln-dried and green Hemlock and Douglas-fir dimensional lumber and timbers, is expected to curtail production immediately with an orderly wind-down of operations to be completed by the end of the first quarter of 2024. The mill, with a capacity to produce 220 million board feet, has been a substantial player in the region's lumber market.
In addition to the Oregon curtailment, Interfor has announced a temporary reduction in lumber production across its British Columbia mills. The company anticipates a cutback of approximately 30 million board feet in the first quarter of 2024, attributing this adjustment to a mix of weak market conditions, diminished log inventories, and unseasonably warm weather that has hampered log deliveries.
Bruce Luxmoore, Executive Vice-President of U.S. Operations at Interfor, expressed recognition of the impact these decisions will have on the workforce. The company has emphasized its commitment to supporting affected employees during this transition, acknowledging their significant contributions to the business over the years.
Despite these cutbacks, Interfor plans to maintain operations at its three U.S. Northwest stud mills located in Molalla, Oregon, Longview, Washington, and Port Angeles, Washington. These sites represent a critical component of Interfor's strategic presence in the U.S. lumber market.
Interfor's Q4 2023 financial results reveal a deepening net loss of $169.0 million, significantly widening from the $42.4 million in Q3 2023, and sharply higher than the $72.2 million in Q4 2022. The company's adjusted EBITDA also turned negative, posting a $51.4 million loss on sales of $785.9 million for the quarter. Yearly sales for 2023 concluded at $3,315.7 million, marking a decline from the previous year's $4,584 million.
In its Q4 report, the company provided a cautious near-term outlook for North American lumber markets, attributing expected market depression to various economic pressures including inflation and high interest rates. Nevertheless, the report also outlines a more optimistic mid-term forecast, highlighting the potential for market uplift from favorable supply and demand fundamentals, such as the aging U.S. housing stock and a prevalent housing shortage, despite the anticipated constraints on lumber supply due to labor shortages and limited global fiber availability.
