Editor's Note: U.S. dollars were calculated using the average foreign exchange rate provided by Interfor in its financial report.
Interfor's net earnings took a nosedive during the third quarter, going from C$1.4 million (US$1.4 million) during 2010's third quarter to C$6,000 (US$5,880) this year, the company revealed today. The Vancouver, British Columbia-based timber company reported a 32% increase in sales, however, to C$200.2 million (US$196.2 million).
The company's operating income swung into the black to finish at C$1.3 million (US$1.3 million). Production costs jumped 32% to C$179.2 million (US$175.6 million). Export taxes, selling and administration costs, and depletion and amortization of timber, roads, and other costs also increased.
EBITDA, which Interfor defines as earnings before finance costs, taxes, depreciation, depletion, amortization, restructuring costs, other foreign exchange gains and losses, and asset write-downs, slipped $600,000 to C$14.7 million (US$14.4 million). Adjusted EBITDA, which takes into account income and other income of associate companies, rose 35% to C$14.3 million (US$14 million).
Sales within the lumber segment increased 21% to C$136.7 million (US$134 million), while the log segment saw sales jump 64% to C$36 million (US$35.28 million). The wood chips and by-products segment also revealed a 26% rise in sales to C$17.6 million (US$17.3 million). Interfor's ocean freight and other segment's sales more than tripled to C$9.9 million (US$9.7 million).
Both lumber sales volume and production increased, with sales volume hitting 336 million board feet, a 21% improvement over the same period last year. Lumber production also went up 15% to 313 million board feet. The average selling price for lumber, which Interfor calculates using gross sales before export taxes, went down $1 to C$407 (US$398.86) per thousand board feet.
"Business conditions remain uncertain," said the company. "Sovereign debt issues in Europe, slow progress in the U.S. and credit conditions in China bear watching. On the positive side, a noticeable reduction in demand from offshore buyers has resulted in some easing of log prices in the Pacific Northwest."