Citing solid performances in both the lumber and pulp and paper segments, Canfor Corp. reported Tuesday $210 million in net earnings for the third quarter.
The result increased year-to-date earnings to $1.36 billion and came despite a sharp decline in the price of Western Spruce, Pine and Fir 2x4s.
From a record high of US $1,630 per thousand board feet in early May, the price plummeted to a low of US $385 in mid-August before rising back to US $533 at the end of the period.
The decline prompted the company to invoke temporary curtailments on its Western Canadian operations. Trouble with shipping due to the wildfires also played a role as total lumber production declined by 15 per cent from the previous quarter.
The curtailments remain in place, a Canfor spokesperson confirmed Wednesday.
"These will continue until market conditions meaningfully improve and support a return to the full operating schedule. Canfor recognizes the impact that volatile lumber markets have on our employees, our contractors and our communities and we’ve been working with them to mitigate the negative effects," the spokesperson added in a statement to the Citizen.
Third quarter earnings were down slightly from $218.1 million recorded for the same period in 2020 and well down from the $726.9 million for the second quarter of 2021, when prices were at their peak.
“Despite the decline in North American benchmark lumber prices and the supply chain challenges experienced during the quarter, our employees demonstrated ongoing resilience and we are pleased to see the continued benefit of our global diversification strategy, with our European lumber business results surpassing the previous quarter record and reaching a new all-time high in the current period," Canfor president and CEO Don Kayne said in the update.
"While our pulp business saw lower production, largely associated with the previously announced scheduled and unscheduled downtime, it delivered solid financial results in the quarter. The global supply chain constraints are expected to continue in the fourth quarter, but overall lumber markets are anticipated to be stronger.”
Looking ahead, the company is projecting a strong market for lumber throughout the fourth quarter,
"In recent weeks, demand in the repair and remodeling sector, which experienced downward pressure in the third quarter, has significantly increased, and is anticipated to continue to improve over the balance of the year as supply and demand move back into balance following summer curtailments and reduced operating rates across Western Canada," the company says.
A more challenging market is expected on the pulp side due to above-average global pulp inventory levels, a congested supply chain and softening demand from China.
