Canfor reports modest profit for quarter

Production was up 24 per cent, reflecting acquisitions, capital improvements and the restart of the Vavenby sawmill

Canfor Corporation recently reported shareholder net income of $4.5 million, or $0.03 per share, for the second quarter of 2012.

This compares to a shareholder net loss of $16.2 million, or $0.11 per share, for the first quarter of 2012 and shareholder net income of $2.1 million, or $0.01 per share, for the second quarter of 2011.

Commenting on the second quarter performance, Canfor president and CEO Don Kayne said, “The improvement in lumber prices and earnings reflected a modest increase in construction activity in North America and continued solid offshore demand for Western SPF lumber products.”

With respect to its recently acquired operations in the Kootenays, Kayne added, “The integration of these operations has gone very smoothly, and the start-up of our upgraded Radium mill in the same south-east Kootenay region of B.C. remains on schedule for the fall of this year.”

The company reported operating income of $26.0 million for the second quarter of 2012, compared to an operating loss of $21.5 million for the first quarter. The positive variance primarily reflected improved results in the lumber segment, where stronger markets supported higher prices.

Compared to the second quarter of 2011 production was up 24 per cent, largely reflecting the recent acquisition in the Kootenays, coupled with increased productivity following various capital improvement projects in 2011 and the restart of the Vavenby sawmill in the third quarter of 2011.

Lumber markets showed signs of improvement in the second quarter of 2012, reflecting stronger underlying demand in both North American and offshore markets. U.S. housing activity continued the upward trend seen in the prior quarter, with housing starts up over three per cent from the previous quarter. Canadian housing starts were also up, increasing 12 per cent from the previous quarter. In China, markets improved as inventories returned to more normal levels following the inventory build early in the previous quarter. Japan demand remained solid through the quarter. Pulp markets were relatively balanced heading into the quarter but saw signs of weakness as the quarter progressed.