BRITISH COLUMBIA

Canfor Corp swings to fourth quarter profit as lumber market rallies

02/14/2013 06:39 EST | Updated 04/16/2013 05:12 EDT
VANCOUVER - Canfor Corporation (TSX:CFP) said it swung to a profit in the fourth quarter as lumber markets ended 2012 with one of the strongest price rallies in recent years.

Citing an improved U.S. housing market and strong demand from offshore markets, Canfor posted net income of $21.6 million, or 15 cents per share for quarter.

That compared to a loss of $44.1 million, or 31 cents per share in the year earlier period.

Sales revenue improved to $721.8 million in the fourth quarter compared to $576.2 million year over year.

"The improvement in lumber sales realizations reflected the encouraging continued growth in global demand for softwood lumber products," president and CEO Don Kayne said in a statement.

"After last quarter's challenges at the Canfor Pulp facilities, it was encouraging to see solid improvements in productivity, as well as some improvement in market conditions this quarter."

On an adjusted basis, Canfor handed in earning per share of 16 cents — missing analyst expectations by three cents.

The Vancouver-based company said it expects the U.S. market to continue its gradual recovery, with rising housing prices and an improved job market supporting the housing market. But it anticipated that Canadian markets would remain flat through 2013.

Northern bleached softwood kraft pulp prices, Canfor said, are projected to show a modest improvement through the first half of 2013. But it warned the second half of the year is more uncertain given Europe's economic challenges and new hardwood and softwood pulp capacity projected to come online.

The lumber, pulp and paper producer has 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.

Shares in Canfor Corp., which reported after markets closed Thursday, finished the day up 45 cents to $18.90.