It appears that Canfor isn’t out of the woods yet. On Thursday the corporation reported a net loss attributable to shareholders (“shareholder net loss”) of $16.2 million, or $0.11 per share, for the first quarter of 2012, compared to a shareholder net loss of $44.1 million, or $0.31 per share, for the fourth quarter of 2011 and shareholder net income of $7.0 million, or $0.05 per share, for the first quarter of 2011.
Canfor’s president and CEO Don Kayne said, “While it was encouraging to see improved lumber prices in North America in the first quarter, the effect of weak low grade prices in China offset some of these gains. With inventories in China returning to more normal levels, we are anticipating an improvement in low grade lumber prices to China in the second quarter.”
Kayne added that progress continued to be made with respect to improving the Company’s cost performance.
“We continue to see a trend of steadily improving productivity and unit conversion costs at our lumber operations, which reflects both our targeted strategic capital investments and a strong focus on continuous improvement,” he said.
Lumber markets were mixed in the first quarter of 2012, as a modest improvement in North American market conditions contrasted with a weaker market for lower grade products in China, where the effects of a significant inventory build ahead of the Lunar New Year and slower demand weighed heavily on prices through much of the quarter. U.S. housing activity saw a small increase, in part due to unseasonably mild weather, with housing starts for the quarter averaging 687,000 units (seasonally adjusted annual rate), up 3 percent from the previous quarter.
Canadian housing starts also saw a modest increase from the previous quarter. Despite an increase in North American prices, overall lumber sales realizations were largely unchanged from the previous quarter due to lower offshore realizations, particularly for low-grade products. The average North American benchmark Western SPF 2×4 #2 and better price increased US$28, or 12 per cent, to US$266 per Mfbm, although increases for most other widths and dimensions were less marked.