Canfor reports quarterly net income of $33.5 million

Canfor Corporation has posted a net income of $33.5 million for its third quarter, compared to $40.4 million for the second quarter of 2010 and $4.1 million for the third quarter of 2009.

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 that Canfor remains confident in the longer-term prospects for the lumber sector and is currently investing in a number of high return capital projects which will further increase the company'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 market activity 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. Western SPF lumber prices edged up in August and September mostly due to seasonal factors and rising demand from China, while prices for Southern Yellow Pine lumber products continued to slide well into the third quarter before stabilizing in September. Sales realizations from offshore markets, the majority of which are negotiated quarterly or monthly in advance, showed a modest increase compared to the second quarter.

Northern Bleached Softwood Kraft ("NBSK") pulp markets in the third quarter continued to benefit from high prices reflecting steady demand and balanced supply. Prices peaked at record-high levels early in the quarter before weakening slightly as a result of declining pulp consumption, particularly in Asia.

The company's lumber business operated at approximately 70% of capacity in the third quarter, with its recently restarted Chetwynd and Quesnel mill operations in the British Columbia Interior operating through the quarter. Production from the Quesnel mill is being fully dedicated to the China market.

In September, Canfor announced the permanent closure in January 2011 of its Clear Lake lumber operation located near Prince George, B.C. The protracted downturn in the U.S. housing sector and a lack of economic long-term fibre supply to this facility were the major factors behind this decision.

Source: Canfor

More Details: Canfor Reports Results for Third Quarter of 2010 (Canfor)