Canfor swung into the red during the third quarter with a C$9.6 million (US$9.8 million) loss, compared with a C$37.2 million (US$37.9 million) income during the same period last year, the company announced today.
The Vancouver, B.C.-based wood product and pulp producer managed a 2% increase in sales to C$602.1 million (US$ 614.1 million) during the quarter. Operating income decreased 55% to C$14.5 million (US$14.8 million) for the quarter, which the company said was mainly driven by a decline in the pulp and paper segment's earnings. EBITDA, which it defines as operating income before amortization, declined 27% to C$54.4 million (US$55.5 million). The company continues to rely heavily on both U.S. and other foreign markets.
"The U.S. market remains challenging as the economy struggles to emerge from its slump and there remains little prospect of a meaningful recovery in the short term," said CEO and president Don Kayne. "On a more positive note, we continued to see strong shipment levels and increased demand for higher value products in our offshore markets during the third quarter."
Canfor's lumber segment improved its operating loss by almost $2 million to C$11.7 million (US$11.9 million) on a 7% increase in sales to C$331.4 million (US$338 million). Segment EBITDA grew by $1.1 million to C$9.7 million (US$9.9 million).
Lumber shipments during the quarter increased 12% to 981 million board feet. Oriented strand board (OSB) shipments also rose 7% to 62 million square feet for 3/8-inch OSB. The company said shipments remained relatively flat even though production grew 3%, mainly due to what the company cited as "improved productivity."
Average prices for Western SPF (Spruce/Pine/Fur) 2x4 #2&Btr rose 10% to US$246. Southern Yellow Pine (East) 2x4 #2 lumber prices improved US$17 to US$259. The benchmark price for OSB- North Central moved up 3% to US$184.
"U.S. lumber consumption is projected to slow in the fourth quarter of 2011 with lower seasonal activity and the continued high volume of home inventories," the company said. "Lumber shipments are projected to ease somewhat in the fourth quarter, in part reflecting the Chinese New Year early in 2012."