Canfor, West Fraser post healthy Q3 profits

Forestry firms healthy profits

Two of B.C.’s largest forest companies report they still had healthy earnings in the third quarter, despite lumber prices dipping from a record-breaking highs in previous quarters.

In third quarter financials released Wednesday, West Fraser Timber Co. (TSX:WFG) reported earnings of $460 million, compared to $1.5 billion in Q2, and $260 million in Q3 2020.

Canfor Corp. (TSX:CFP) reported Q3 net income of $210 million, compared to $726 million in Q2 and $218 million in Q3 2020.

West Fraser reported total sales of $2.358 billion in Q3.

“Despite a number of challenges, the third quarter of 2021 was one of West Fraser’s strongest quarters ever,” West Fraser CEO Ray Ferris said in a press release.

"We operated responsibly across the business, managing the complexities of transportation and mill disruptions in the face of higher duties and B.C. stumpage and softer demand in a cyclical commodity environment.

“The benefits of product and geographic diversification following the Norbord acquisition were especially evident this quarter in the relative strength of our North American OSB results.”

Ferris referred to West Fraser’s $4 billion acquisition of Norbord, which closed in February 2021.

“Compared to the second quarter of 2021, current quarter reported operating income was down $710.3 million, reflecting a material decline in lumber segment earnings from an all-time high in the previous quarter, and, to a lesser extent, moderately lower pulp and paper segment earnings,” Canfor stated in its financials.

Earlier this year, North American lumber prices broke records, with western spruce-pine-fir 2X4 lumber hitting $1,600 per thousand board feet, according to Natural Resources Canada. They have since fallen to about $600 per thousand board feet, which is still above average.

“Looking ahead, notwithstanding the sharp correction in North American benchmark lumber prices in the third quarter and ongoing global logistics constraints, overall lumber market fundamentals are projected to be strong through the fourth quarter of 2021,” Canfor forecasts.

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