Canfor posts a quarterly net income of $32.5 million

Canfor Corporation has reported total net income of $32.5 million for the first quarter of 2010, compared to a net loss of $9.1 million for the fourth quarter of 2009 and a net loss of $69.9 million for the first quarter of 2009.

Lumber and pulp prices increased significantly in the first quarter of 2010, and were the major reason for the Canfor's improved results for the quarter. Although U.S. housing activity showed only a modest improvement from the historically low levels of the previous quarter, North American lumber prices for Western Spruce/Pine/Fir ("SPF") and Southern Yellow Pine ("SYP") recorded strong gains mostly as a result of various supply factors. Northern Bleached Softwood Kraft ("NBSK") pulp prices also moved up in the first quarter, reflecting improved demand, continued low global pulp inventory levels and the major disruption to pulp production caused by the Chilean earthquake in late February. The Canadian dollar edged towards parity with the US dollar during the quarter, partially offsetting the pricing gains for Canfor's Canadian operations.

Commenting on the results, Canfor's President and Chief Executive Officer, Jim Shepard, said, "While we are very pleased to see the rise in North American lumber prices, we recognize the increase is largely due to supply factors rather than to any significant increase in U.S. house construction activity." Shepard noted that the current price rally was attributable in part to the continued growth of lumber shipments to China and other Asian markets.

During the first quarter, the Canfor reached a new 4-year labour agreement with the United Steelworkers union which applies to 14 of Canfor's operations in British Columbia. "This agreement sets a new positive tone for Canfor," said Shepard. "It provides some relief from the protracted housing downturn we are facing, and puts into place a profit-based performance incentive plan for our hourly employees, which I believe will result in enhanced teamwork and operational performance."

Looking ahead, the second quarter is expected to see a moderate pick up in lumber demand, reflecting seasonally higher housing starts and repair and renovation activity. As a result of historically-low operating rates and lower B.C. Interior log harvesting activity in the most recent winter logging season, Western SPF lumber may be in shorter supply, which could help to support current price levels through the second quarter. "With the U.S. economy and U.S. housing sector still facing significant headwinds, we expect to see a slow and somewhat fragile recovery of the U.S. housing market over the coming months," said Shepard. As a result, Shepard said Canfor would continue to match production to market demand and maintain its tight control over costs.

Read full press release:

Canfor Reports Improved Results for First Quarter of 2010 - Supply Factors Contribute to Significant Lumber and Pulp Price Gains