BRITISH COLUMBIA

Canfor posts $22 million profit in third quarter on improved lumber markets

10/23/2012 05:59 EDT | Updated 12/23/2012 05:12 EST
VANCOUVER - Canfor Corporation (TSX:CFP) is reporting it swung back to profitability in the third quarter compared to the same period last year, citing a moderate improvement in lumber markets.

The company posted net income of $22.2 million, or 16 cents per share, for the third quarter compared to a net loss of $21.6 million, or 15 cents per share, in the same period last year.

Sales revenue for the quarter came in at $684 million compared to $602 million year over year.

The Vancouver-based company says lumber markets saw moderate improvement in the third quarter, and it noted improved U.S. housing activity and solid demand in China and Japan.

Net earnings came in at $15.3 million, or 11 cents per share after adjusting for items that affected comparability with prior periods, including a foreign exchange loss of $4 million.

Canfor was expected to earn five cents per share in adjusted earnings on $696 million in revenues in the quarter, according to analysts polled by Thomson Reuters.

The Vancouver-based lumber, pulp and paper producer has benefited from stronger lumber prices and improving demand in North America and abroad.

It is primarily involved in the lumber business, with production facilities in B.C., Alberta, Quebec and the United States.

Canfor also has a 50.2 per cent interest in the pulp and paper business owned by Canfor Pulp Limited Partnership; a 50 per cent interest in the oriented strand board business of Peace Valley OSB and owns a bleached chemi-thermo mechanical pulp mill.

Canfor is among the Canadian lumber producers that are expected to benefit over the next few years from rising U.S. housing starts and lumber prices as the industry continues to recover from the collapse of a few years ago.

A recent report suggested that U.S. housing starts should reach 900,000 next year and just over one million in 2014.

At that level, lumber prices should reach about US$340 per thousand board feet by the first quarter of 2013. The price should average above US$400 if starts reach 1.4 million units per year in 2014.