West Fraser Timber Co. Ltd. continued its turnaround from a dismal 2009 by announcing today that earnings after discontinued operations totaled C$45 million (US$44.1 million) in the third quarter vs. a C$199 million loss in the year earlier period. Sales rose 15% from 3Q9 to total C$707 million (US$692.9 million).
The Vancouver-based company's lumber segment reported operating earnings of C$22 million and EBITDA--earnings before interest, taxes, depreciation, and amortization--of C$49 million. Meanwhile, the panel segment (including plywood, laminated veneer lumber, and medium-density fiberboard) produced operating earnings of C$14 million and EBITDA of C$20 million. Add in the company's pulp and paper operations and EBITDA more than doubled to C$109 million from a year-earlier C$41 million.
Production of SPF (spruce-pine-fir) rose 13.9% to 827 million board feet, while production of southern yellow pine increased 11% to 363 million board feet, plywood was up 5.2% to 203 million square feet, and MDF held steady at 52 million square feet. LVL production dropped by 19% from the year before to reach 362,000 cubic feet.
Shipments of SPF weren't so robust, increasing 8.3% to 837 million board feet, while SYP shipments grew 13.3% to 382 million board feet, plywood shipments climbed 22.5% to 218 million square feet, MDF shipments dropped by 6.1% to 46 million square feet, and LVL shipments sank by 20.4% to 363,000 cubit feet.
"Earnings for the current quarter were very positive although moderately weaker than the previous quarter's strong results," West Fraser said in a statement. "The decline in earnings was the result of weakening lumberprices, including sharply weaker SYP lumber prices, during the quarter as well as a modest decline in pulp prices in the latter part of the current quarter."
Looking ahead, West Fraser said uncertainty about the U.S. housing market "is expected to continue at least over the next several quarters. Although Canadian solid wood product prices reflect a degree of balance between supply and demand, current weak SYP lumber prices reflect a continuing oversupply of that U.S. product. The strength of the Canadian dollar and a weak U.S. housing market is likely to continue to result in the import of U.S.-produced plywood into Canada which will continue to put downward pressure on plywood prices. This trend is likely to be reversed either by a decline in the value of the Canadian dollar against the U.S. dollar or a recovery of the U.S. housing market."
