Canfor’s recent announcement that it plans to spend $24 million upgrading its Vavenby mill is just part of $62 million in capital upgrades planned for its Vavenby, Polar and Plateau operations in B.C. as the company recovers from the recent recession.
The three projects are part of a capital spending plan for 2011 totaling $145 million, and a three-year strategic plan that calls for total investment in sawmill improvement projects of $300 million.
“This continues our strategy to invest in our mills, creating efficient and low cost operations,” said Jim Shepard, Canfor president and CEO.
At the same time as its Vavenby announcement, Canfor reported net income of $54.9 million for the fourth quarter of 2010, compared to $33.5 million for the third quarter of 2010 and a net loss of $9.1 million for the fourth quarter of 2009. For the year ended December 31, 2010, the company’s net income was $161.3 million, compared to a net loss of $62.8 million for 2009.
The North American lumber market continued to reflect a struggling U.S. housing sector in the fourth quarter of 2010. There was some good news on the demand side however, as China’s increasing consumption of B.C. softwood lumber continued in the quarter and helped to support higher North American market prices for narrower dimensions.
Canfor’s offshore lumber shipments continued to set volume records. Increased lumber demand from China and Japan led to a 49 per cent rise in offshore volume from the third quarter. China continued to lead all offshore shipment volumes, with shipments in the quarter including an increased proportion of #2&Btr grade.
The average North American benchmark Western SPF (Spruce/Pine/Fir) 2×4 #2&Btr lumber price was up US$46 per thousand board feet, or 21 per cent, in the fourth quarter, but North American price increases for most other grades and dimensions were more modest while prices in offshore markets also saw smaller gains. The company’s Western SPF sales realizations in the fourth quarter also reflected a lower-value sales mix, in part due to lower production of higher-value prime products, as well as a stronger Canadian dollar. As a result, sales realizations were up only slightly from the previous quarter.
The company’s lumber operations ran at approximately 65 per cent of capacity in the fourth quarter of 2010, down from 70 per cent in the previous quarter.
Commenting on the results, Canfor president and CEO Jim Shepard said, “We continue to be very encouraged by the growth of our lumber business in key Asian markets, particularly Japan and China, which has mitigated some of the impact of the slow U.S. housing market.”