West Fraser Timber Co. reported today its earnings after discounted operations swung to a C$39 million (US37.9 million*) in the fourth quarter from a C$20 million (US$17.5 million*) loss in the year-earlier quarter as sales jumped 26.1% to C$719 million.
The Vancouver, B.C.-based company's lumber segment swung to a C$20 million operating profit in the fourth quarter from a C$22 million loss in the year-earlier period as sales jumped 32% to C$397 million, thanks primarily to better prices, continued tight supplies, and increased demand from China. Meanwhile, the panels segment--which produces plywood, laminated veneer lumber and multidensity fiberboard--reported its operating profit dwindled 75% to C$2 million while sales remained unchanged at C$92 million. Increasing supplies of U.S.-made plywood into the Canadian market caused plywood prices to drop, the company said.
"Markets are still somewhat uneven, reflecting the fragile nature of the recovery," Hank Ketcham, the company's chairman, president, and CEO, said in a statement. "However, our mills ran well despite some challenging weather conditions and we are generally pleased with the results."
West Fraser siad it's cautious about prospects for 2011. Demand from Asia will help lumber and panel markets, but continued housing doldrums in the United States will keep panel markets struggling, it said. "Although many analysts expect some improvement in U.S. housing there are a number of factors, notably high rates of foreclosures and significant shadow inventories, that could undermine any meaningful recovery," the company said.
For all 2010, West Fraser swung to earnings after discontinued operations of C$166 million (US$161.2 million*) from 2009's loss of C$137 million (US$120 million*). The lumber segment showed the biggest change, swinging to a C$125 million profit from 2009's C$191 million loss on a 26.2% climb in sales to C$1.62 billion. Meanwhile, the panel unit returned to the black, recording a C$37 million operating profit vs. a year-earler C$9 million loss, even though sales grew only 2.6% to C$401 million.
Editor's Note: This story converts Canadian figures to U.S. currency based on West Fraser's estimates that valued a Canadian dollar at 97.1 U.S. cents in 2010 and 87.6 U.S. cents in 2009.