West Fraser Timber Co. reported today its earnings after discontinued operations shrank in the first quarter to C$19 million (US$19.3 million) from C$29 million (US$29.4 million) in the year-earlier period as sales remained virtually unchanged at C$687 million (US$697.3 million).
The Vancouver-based company's lumber segment saw operating earnings drop 17.5% to C$33 (US$33.5 million) even though sales rose by C$2 million to reach C$411 million (US$417.2 million). "Compared to the first quarter of the previous year, operating earnings were lower due mainly to lower shipments of SPF lumber, the effect of the stronger Canadian dollar on SPF sales realizations, lower SYP prices and higher lumber production costs," the company said in a statement. "These factors were partially offset by higher SYP shipments in the current quarter."
Meanwhile, the panels segment's operating earnings were flat, a drop of C$6 million (US$6.1 million) from the January-March 2010 quarter, a sales fell 9% to C$91 million (US$92.4 million). "Marginally higher plywood prices were offset mainly by the stronger Canadian dollar and lower shipment volumes of plywood," West Fraser said. "As the Canadian dollar continues to strengthen, greater volumes of competing U.S.-produced plywood are being sold to customers in Canada, West Fraser’s primary market. The increased plywood supply has put downward pressure on plywood prices for the past several quarters."
For this quarter, the company noted that lumber prices have weakened dramatically since March 31--"likely the result of the restarting of some previously curtailed production without a balancing increase in demand," the company said. "Prices for the company’s construction products are expected to remain volatile until the U.S. housing industry experiences sustainable recovery."
Lumber product rose 14.5% to 1.3 million board feet but shipments were virtually unchanged at 1.1 million board feet.