Canfor Corp. Records Notable Surge in Lumber Earnings in Q2

VANCOUVER (Scrap Monster): Lumber major Canfor Corp. has declared results for second quarter of 2017. The company reported operating income of $131.0 million for Q2 2017, significantly higher when compared with the operating income of $106.8 million during the first quarter of the year. The quarter reported strong surge in operating earnings from the lumber segment. However, improved lumber segment earnings were partially offset by the drop in earnings from the pulp and paper segments.

According to Canfor, the lumber demand in North America remained more or less stable during the second quarter. The US housing starts averaged at 1,164,000 units, down 6% when matched with the previous quarter. The Canadian housing starts remained solid, averaging at 205,000 units. The offshore lumber demand from other regions including China and Japan continued to record significant growth during Q2 this year. The demand for higher value lumber products remained robust, Canfor noted.

The lumber segment sales for the second quarter of 2017 totaled $904.3 million as compared with $817.1 million during the previous quarter. The lumber shipments totaled 1.36 billion board feet, which is moderately higher than the previous quarter. The total lumber production amounted to 1.31 billion board feet, more or less flat when compared with the previous quarter. The lumber unit manufacturing costs during Q2 were in line with the previous quarter, but moderately higher over second quarter of 2016.

On the other hand, the pulp production during Q2 this year reported sharp decline by 13% over the previous quarter to total 275,200 tonnes. The total pulp shipments plunged by 18% from the first quarter to 276,300 tonnes. Paper unit sales realizations were slightly up during Q2, largely on account of weaker Canadian dollar. Pulp unit manufacturing costs were significantly higher in the current quarter. Paper unit manufacturing costs also saw modest increase when compared with Q1 ’17.

Don Kayne, Canfor’s President and Chief Executive Officer stated that the company’s lumber segment was able to deliver solid operating results despite the assessment of preliminary duties. The pulp business too generated solid results despite passing through seasonally higher scheduled maintenance downtime. The slow but gradual recovery of US housing market through the rest of 2017 is expected to result in improved consumption of North American lumber. The demand from key offshore markets is also anticipated to remain solid, Kayne said.