The third quarter was a rollercoaster ride for lumber manufacturers and timber harvesters, as some saw earnings go up while others plummeted well below last year's results. Of the major companies reporting, only three managed to improve their bottom line, and two of those still remained in the red. Only Potlatch, the Spokane, Wash.-based Real Estate Investment Trust, managed to improve earnings, jumping 41% from the same period a year ago to $25.6 million.
Six companies, meanwhile, experienced a drop in net earnings, one of which--Canfor--went from black to red and another--Louisiana-Pacific Corp. (LP)--found darker shades of red. Canfor, based out of Vancouver, British Columbia, went from a C$37.2 million (US$37.9 million) profit during 2010's third quarter to a C$9.6 million (US$9.8 million) loss.
A number of companies cited continued struggles within the global economy, as well as the U.S. housing market, as the reason for the inconsistent results.
"All our businesses faced challenging markets in the third quarter, as the U.S. housing market languished and we experienced a slowdown in demand from China," said Weyerhaeuser president and CEO Dan Fulton. "We remain focused on improving performance with today's level of demand, while being prepared to flex all of our operations as markets improve."
Companies were also holding out little hope for the fourth quarter. "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," said Canfor in its report. "Lumber shipments are projected to ease somewhat in the fourth quarter, in part reflecting the Chinese New Year in 2012."
Among the biggest losses, Temple-Inland recorded a 95% drop in net income, even though the company's building products segment improved operating loss. AbitibiBowater, which recently changed its name to Resolute Forest Products, a U.S. wood product and pulp manufacturer, posted one of the largest increases, going from a $829 million loss a year ago to a $44 million loss. That result, however, was impacted by a $99 million interest expense, as well as a $731 million reorganization item.
Here's how everyone fared:
- LP fell further into the red after it doubled its net loss to reach $65.6 million during the quarter. Net sales, meanwhile, improved 9% to $350.6 million during the quarter ended Sept. 30.
- Interfor's net earnings plummeted from C$1.4 million (US$1.4 million) during 2010's third quarter to C$6,000 (US$5,880). The timber company reported a 32% increase in sales, however, to C$200.2 million (US$196.2 million).
- Boise Cascade's net loss improved to $3.7 million, compared with a $5.6 million loss during the same period a year ago. Sales increased 6% to $623.2 million for the quarter.
- AbitibiBowater's net loss improvement remains one of the biggest compared with the $829 million whole the company faced during the same period a year ago. Net sales remained flat at $1.2 billion.
- Canfor fell into the red during the third quarter with a C$9.6 million (US$9.8 million) loss, compared with earnings of C$37.2 million (US$37.9 million) during the same period last year. The wood product and pulp producer increased sales by 2% to C$602.1 million (US$ 614.1 million).
- Weyerhaeuser's net earnings fell 86% from the same period last year. Last year's results included special items related to the company's change into a real estate investment trust, to $157 million. Excluding special charges, which were $1.04 billion during 2010's third quarter and $91 million this year, earnings decreased only 18% to $66 million.
- West Fraser Timber Co. Ltd. reported that its earnings from continuing operations decreased 88% to C$6 million (US$6.1 million) in the third quarter from the year-ago period even though sales were virtually the same at C$705 million (US$719.1 million).
- Potlatch Corp.'s third quarter net earnings jumped 41%, despite an almost 4% drop in sales to $152.9 million.
- Temple-Inland's net income plummeted 95% during the third quarter, compared with the same period last year, to $6 million, despite a 1% increase in net sales to $974 million.