Canfor Pulp Products Inc. reported an operating loss of $49.3 million for the Q3 2023, compared to an operating loss of $37.9 million for the Q2 2023. After taking into consideration a net $2.0 million reversal of a previously recognized inventory write-down, the Company’s adjusted operating loss was $51.3 million for the Q3 2023, compared to an adjusted operating loss of $31.0 million for the Q2 2023.
Q3 2023 sales decreased by 38.8% to $188.8 million, compared to $308.3 million in the Q3 2022.
These results principally reflected the continuation of soft global pulp market conditions throughout most of the current period combined with extensive downtime at the Company’s Northwood Northern Bleached Softwood Kraft (“NBSK”) pulp mill driven by supply chain disruptions and scheduled maintenance, as well as persistent reliability challenges and a delayed restart. When combined, these factors drove a significant unfavourable timing lag in the Company’s shipments (versus orders) and led to a substantial decline in the Company’s NBSK pulp sales unit realizations in the current quarter.
Canfor Pulp Products' President and CEO, Kevin Edgson, said, “Clearly, this was a difficult quarter for our pulp business as global pulp market conditions continued to be challenged with high pulp producer inventories and tepid demand. Market conditions, however, appear to be showing some signs of improvement, but we remain cautious in our market outlook given general global economic pressures. Operationally, while downtime weighed heavily on our Q3 results, we completed our scheduled maintenance outage at Northwood on time and on budget with positive results received from the inspections of our recovery boilers. Notwithstanding the successful execution of this scheduled maintenance downtime, the restart of Northwood has been hampered with operational challenges. We appreciate the efforts, perseverance and focus of our employees on Northwood’s scheduled maintenance outage and re-start and we are focused on continuing to improve productivity and reliability going forward.”
Looking forward, global softwood pulp markets are anticipated to experience a slight improvement in the Q4 2023, as elevated inventory levels slowly begin to normalize following the seasonally slower summer months. These factors are projected to be tempered by general global economic uncertainty and pressures. The Company’s results in the Q4 2023 will reflect the aforementioned operational challenges at Northwood associated with the delayed startup, with a projected 30,000 tonnes of reduced NBSK pulp production, combined with higher associated maintenance costs and lower shipment volumes. These factors are also anticipated to give rise to a larger-than-normal unfavourable timing lag in shipments (vs orders) and thus it is estimated that Q4 results will reflect persistently lower NBSK pulp sales unit realizations, regardless of any uptick in USdollar NBSK list prices that may arise.
Canfor Pulp Products Inc. is a leading global supplier of pulp and paper products. Canfor Pulp owns and operates two mills in Prince George, BC with a total capacity of 780,000 tonnes of Premium Reinforcing NBSK Pulp and 140,000 tonnes of kraft paper.
