Canfor reports its 3Q 2022 results

Canfor Corporation recently reported its third quarter of 2022 results.

For the third quarter of 2022, the Company reported operating income of $108.6 million, down $423.0 million from the operating income of $531.6 million reported for the second quarter of 2022, largely reflecting a decline in lumber segment earnings, slightly offset by improved pulp and paper segment results.

Results in the current quarter include an $88.5 million net inventory write-down, principally driven by the lumber segment, as well as a net duty recovery of $97.6 million (US$73.0 million) resulting from the finalization of countervailing (“CVD”) and anti-dumping duty (“ADD”) rates applicable to the third period of review (“POR3”).

Commenting on the Company’s third quarter results, Canfor’s President and Chief Executive Officer, Don Kayne, said, “As global lumber market conditions continued to soften from the highs earlier in the year, our lumber business delivered solid results in the quarter, largely reflecting the benefit of our global diversification strategy. However, the

steep declines in global lumber pricing, combined with high log costs in British Columbia (“BC”), led to the difficult decision to extend reduced operating schedules at our Western Canadian sawmills. For our pulp business, our focus on enhancing operational performance and improving reliability while managing persistent supply chain and fibrerelated challenges allowed us to realize high Northern Bleached Softwood Kraft (“NBSK”) pulp list prices and

recognize improved results in the quarter. While we continue to monitor the current external challenges facing our lumber and pulp businesses, including the fibre situation in BC, we greatly appreciate our employees’ continued efforts in navigating through these difficult conditions.”

Reported results in the lumber segment decreased $450.5 million quarter-over-quarter principally reflecting significant Western Spruce/Pine/Fire (“SPF”) and Southern Yellow Pine (“SYP”) US-dollar benchmark pricing declines in the current period, with the average North American Random Lengths Western SPF 2×4 2&Btr price down US$286 per Mfbm, or 33%, and the average SYP East 2×6 #2 down US$97 per Mfbm, or 17%, and notably lower market

pricing in Europe. This downward pricing pressure was coupled with market-related increases in BC log costs as well as substantially lower production and shipment volumes at the Company’s Western Canadian and European lumber operations, which contributed to a considerable uplift in unit manufacturing costs.

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