China Sales Buoy Canfor in 3rd Quarter

Thursday, October 28, 2010 06:00 PM

Prince George, B.C. - Canfor is reporting a net income of $33.5 million for the third quarter of 2010, compared to $40.4 million for the second quarter of this year, and $4.1 million for the third quarter of 2009.

For the nine months ended September 30, 2010, Canfor's net income was $106.4 million, compared to a net loss of $53.7 million for the same period in 2009.

The company says the success in the third quarter is a result of solid markets established in China. Canfor says the North American lumber market was subdued in the third quarter as the weak U.S. economy and the troubled U.S. housing market continued to weigh on the sector. Average lumber prices in North America were well down from the previous quarter when prices were boosted by a short-lived price rally that ended abruptly in May.

Canfor’s lumber business operated at about 70% of capacity in the third quarter, with its recently restarted Chetwynd and Quesnel mill operations operating through the quarter. Production from the Quesnel mill is being fully dedicated to the China market.

Commenting on the results, Canfor's President and CEO Jim Shepard said, "While pulp markets remained strong in the quarter, the stagnant U.S. housing market weighed on the results of our solid wood business. On a more positive note, we continued to see strong demand from China for our Western SPF lumber, and this was reflected in our record-high shipments to Asia in the third quarter."

Shepard added Canfor remains confident in the longer-term prospects for the lumber sector and is investing in a number of capital projects which will further increase Canfor’s cost competitiveness. "We are making good progress on our Fort St. John mill upgrade and are seeing excellent returns from other recently completed smaller capital projects," said Shepard.

North American lumber demand is expected to remain steady at current levels over the balance of the year influenced by slower seasonal activity and the continued overhang of unsold home inventory. The strength of the offshore lumber market is expected to continue to partially offset the weakness of the North American market. Several end-use markets in China are now solidly established and are expected to result in higher lumber demand in the fourth quarter.

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