Canfor profits exceed $1 billion as lumber prices continue to soar

Canfor profits double

Record-setting lumber prices have continued to have a positive effect on Canfor's bottom line.

On Thursday, the company reported $721.2 million in adjusted net income for its second quarter, boosting the year-to-date total to nearly $1.16 billion - roughly double the figure Canfor reached over the course of 2020 when lumber prices began to skyrocket.

Canfor CEO Don Kayne called the results "exceptional" and credited "solid operational performance" for enabling the company to "capitalize on strong global lumber fundamentals."

"Our pulp business successfully leveraged favourable pulp market conditions and improved productivity to record strong financial results for the quarter,” Kayne added.

Random-length western spruce, pine and fire 2x4 #2 and better continued to climb and reached a record high of US $1,630 per thousand board feet in early May but has since declined sharply finishing at US $875.

Looking ahead, the company is predicting a more challenging third quarter as a result of the reduced interest in repairing and remodeling and some moderation in new home construction.

Pulp and paper reported $36.2 million in net income, up from a $1.1-million loss for the second quarter in 2020. Year-to-date, net income now stands at $8.4 million.

The list price for northern bleached softwood kraft (NBSK) to China averaged US $962 per tonne, up US $79 from the first quarter.

Prices on that front are also expected to soften during the third quarter due to "tepid Chinese demand and above-average global pulp inventory levels combined with the traditionally slower summer months."

Weakness experienced in the markets for bleached chemi-thermo mechanical pulp (BCTMP), especially in Asia, are expected to continue into the third quarter.

Also to play a role will be scheduled maintenance at the Prince George and Taylor pulp mills, as well as "incremental downtime" at the Northwood and Taylor operations due to weather-related rail disruptions and digester-related trouble in July at Northwood, the company says.

Combined, the downtime is projected to reduce NBSK pulp production by about 30,000 tonnes and BCTMP production by an estimated 12,000 tonnes.

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