VANCOUVER – Canfor Corp. reported operating income of $131.0 million for the second quarter of 2017, up $24.2 million from reported operating income of $106.8 million for the first quarter of 2017, as a solid improvement in lumber segment operating earnings more than offset slightly lower pulp and paper segment earnings. Improved lumber segment results primarily reflected higher Western Spruce/Pine/Fir (SPF) and Southern Yellow Pine (SYP) sales and a return to more normal operating conditions following the challenging weather experienced in the first quarter of 2017, offset in part by higher market-based stumpage in Western Canada, says the company’s media release.
Reported results in the second quarter of 2017 include $34.8 million related to the expensing of the U.S. Department of Commerce’s preliminary countervailing duty (CVD) rate of 20.26 per cent effective April 28, 2017, and preliminary anti-dumping duty (ADD) rate of 7.72% effective June 30, 2017, on exports from Canada to the United States, Canfor states. After adjusting for the duties, operating income was $165.8 million for the second quarter of 2017, up $59.0 million from the first quarter of 2017.
Lumber demand in North America remained relatively stable in the second quarter of 2017, the company says. Offshore lumber demand from China, Japan and other regions continued to improve through the second quarter, particularly for Canfor’s higher-value lumber products.
On a reported basis, Western SPF lumber unit sales realizations were up from the previous quarter as higher average Western SPF lumber prices and a 2 per cent weaker Canadian dollar more than offset the impact of the countervailing duty, the press release explains. The average benchmark North American Random Lengths Western SPF 2×4 #2&Btr price was up US$40 per Mfbm, or 11 per cent, compared to the first quarter of 2017, with similar increases seen across wider-width dimensions. Duties assessed by the U.S. DOC equated to approximately $35 per Mfbm.
Total lumber shipments were moderately higher than the previous quarter reflecting a return to more normal levels following the weather-related transportation challenges experienced in the first quarter of 2017. Lumber unit manufacturing costs in the second quarter of 2017 were in line with the previous quarter as the positive impact of productivity gains and stable log costs in the US South offset higher market-based stumpage and increased purchased wood costs in Western Canada, Canfor reports.