February 21, 2019 - Vancouver, B.C. - Canfor Corporation (TSX: CFP) today reported 2018 and fourth quarter of 2018 results.
2018 and Fourth Quarter Highlights
- Reported operating income of $609 million for 2018; adjusted shareholder net income of $488 million, or $3.83 per share and a return on invested capital of 19%
- Fourth quarter adjusted operating loss of $(3) million and sales of $1.03 billion; adjusted shareholder net loss of $(28) million, or $(0.23) per share
- Net debt of $156 million, or 6.2% net debt to total capitalization, at December 31, 2018
- Announced acquisition of 70% of the VIDA Group of Sweden (“VIDA”) for 3,990 million Swedish Krona (approximately CAD$580 million), adding 1.1 billion board feet annual capacity of high-quality spruce and pine products
- Announced phased acquisition of Elliott Sawmilling Co., Inc. (“Elliott”) over a period of two years, for US$110 million, adding 210 million board feet of high-value Southern Yellow Pine lumber annual capacity
The following table summarizes selected financial information for the Company for the comparative periods:
Canfor Corporation generated strong financial results in 2018 with reported operating income of $608.6 million, the highest operating earnings in over 10 years, and up $51.2 million, or 9%, from 2017. Reported annual results include record-high pulp and paper segment earnings and solid lumber segment operating income. The latter was achieved despite major challenges presented by significant log supply constraints and log cost increases in British Columbia (“BC”), severe transportation issues in the first half of the year, extreme weather across North America and one of the worst forest fire seasons in BC, as well as significant market volatility during the year.
For the fourth quarter of 2018, the Company reported an operating loss of $79.1 million, down $280.9 million from reported operating income of $201.8 million for the third quarter of 2018, with the decline in earnings reflecting lower operating income for both the lumber and pulp and paper segments. Reported results for the fourth quarter of 2018 include a net duty expense of $39.9 million, at a current cumulative effective countervailing duty (“CVD”) and anti-dumping duty (“ADD”) rate of 16.14%, compared to $42.6 million reported in the third quarter of 2018. Reported results in the fourth quarter of 2018 also include a $36.7 million inventory valuation adjustment, representing the excess of the carrying cost of year-end lumber and log inventory over net realizable value. After adjusting for the aforementioned items, the Company’s operating loss was $2.5 million for the fourth quarter of 2018, down $246.9 million from similarly adjusted operating income in the third quarter of 2018.