Editor's Note: The conversions from Canadian to U.S. dollar figures are based on Canfor-provided average exchange rates of C$1=US$1.014 in 2011's first quarter and C$1=US96.1 cents in 2010's first quarter.
Canfor Corp.'s net income slipped to C$32.3 million (US$32.8 million) in the first quarter from C$35.5 million (US$34.1 million) in the year-earlier period, even though sales jumped 7.9% to C$624 million (US$632.7 million).
EBITDA--earnings before interest, taxes, depreciation, and amortization--fell 14.9% to C$72.9 million (US$73.9 million).
"A stagnant U.S. housing sector and severe winter weather conditions across much of North America weighed heavily on home construction activity and the company’s ability to deliver lumber to customers," Vancouver-based Canfor said in its earnings report, issued late Wednesday. "While the company’s lumber production in the current quarter was up 7%, shipments of lumber were down 3% reflecting the major disruption to transportation networks caused by the adverse winter conditions.
For offshore markets, lumber demand remained at high levels and continued to support higher prices for narrower dimensions in North America, with the average benchmark Western SPF (Spruce/Pine/Fir) 2x4 #2&Btr price up US$27, or 10%, from the previous quarter," Canfor added. "As was the case in the previous quarter, however, these price increases were not replicated across wider dimensions and all higher grades.
The Canadian dollar's strengthening against the U.S. dollar over the past year--a period in which the loonie strengthened by 5 Canadian cents against the greenback--also hurt Canfor's financials, the company said.
Canfor's lumber segment swung to a C$2.3 million (US$2.3 million) operating loss in the first quarter from a C$15.8 million (US$15.2 million) profit in January through March 2010, even though sales climbed 12.5% to C$328.6 million (US$333.2 million). Shipments totaled 865 million board feet, up 9% from a year ago. Roughly 23% of the first quarter's shipments went to China.
The company noted the U.S. housing market isn't forecast to show any siginificant recovery this year, while Canada's housing market is forecast to show modest improvement.