He says they’re not out of the woods yet, but credits new markets with increased demand.
West Fraser Timber Co. Ltd. reported earnings of $10 million and a diluted loss per share of $0.09 on sales of $720 million in the second quarter of 2011.
For the first half of 2011, earnings were $29 million and diluted earnings per share were $0.68, on sales of $1.4 billion.
“Historic low housing starts and economic uncertainty continue to negatively affect lumber and panel prices,” West Fraser chairman, president and CEO, Hank Ketcham said.
“On a positive note, lumber shipments to Japan are stable while shipments to China are continuing to grow at a steady rate.”
In the quarter the lumber segment generated an operating loss of $8 million and EBITDA (operating earnings, plus amortization and asset impairments) of $11 million.
Sharp declines in lumber prices combined with higher Canadian log costs and a stronger Canadian dollar were the key factors in the decline in earnings from the previous quarter. SPF (spruce, pine, fir) shipments to offshore markets increased in the first half of 2011 but North American markets remain weak.
The panels segment, which includes plywood, LVL (laminated veneer) and MDF (medium density fiberboard) generated an operating loss in the quarter of $5 million and negative EBITDA of $1 million.
Weak plywood prices and higher log costs adversely affected earnings during the quarter. MDF and LVL operations continue to operate on a curtailed basis.
Pulp and paper operations generated operating earnings of $21 million and EBITDA of $38 million.
Pulp prices increased in the quarter with the average NBSK (northern-bleached softwood kraft) benchmark price for the quarter increasing to US$1,025 per tonne, an increase of six per cent from the previous quarter.
Despite an eight-day unplanned shutdown at the Slave Lake pulp mill due to forest fires and a 13-day planned maintenance shutdown at the Cariboo pulp mill, total pulp production was marginally higher than in the previous quarter.
Without industry production curtailments, West Fraser expects lumber prices in the second half of the year to be lower than in the first half of the year as low U.S. housing starts will continue to limit demand.
Although the pulp market appears to be slowing, the company anticipate demand will remain at levels that should support reasonable prices for the balance of the year.