Saturday, May 2, 2015
The Company reported operating income of $83.7 million for the first quarter of 2015, up $21.7 million compared to operating income of $62.0 million for the fourth quarter of 2014. Current quarter results include the consolidation of the Company’s recent US South acquisitions of Beadles Lumber Company Inc. & Balfour Lumber Company (“Beadles
& Balfour”) and Scotch & Gulf Lumber, LLC (“Scotch Gulf”), which were considered to be controlled by Canfor for accounting purposes on January 2, 2015 and January 30, 2015, respectively.
Increased operating income in the lumber segment primarily reflected the Company’s recent acquisitions in the US South, and to a lesser extent, a modest increase in lumber sales realizations. With respect to productivity performance, gains at many of the Company’s Western Canadian sawmill operations largely offset higher unit log costs in the current quarter. In the Company’s pulp and paper segment, operating income also increased due to a weaker Canadian dollar which more than offset a modest reduction in US dollar market prices, and to a lesser extent, reduced pulp unit manufacturing costs which were mostly attributable to a scheduled maintenance outage in the previous quarter.
Abnormally severe winter weather across Eastern North America hampered home building activity during the first quarter, with US housing starts down 9% from the fourth quarter of 2014, averaging 969,000 units on a seasonally adjusted basis for the first quarter of 2015. In Canada, housing starts were down 5% compared to the fourth quarter of 2014, to 177,000 units in first quarter of 2015 on a seasonally adjusted basis. Offshore lumber consumption was lower than the previous quarter reflecting higher-than-normal inventory levels and lower real estate development activity in offshore markets.
The Company’s lumber sales realizations in the current quarter reflected the favourable impact of a 9% weaker Canadian dollar and, to a lesser degree, a higher-value sales mix which more than offset lower US dollar lumber prices. The average Random Lengths Western Spruce/Pine/Fir (“SPF”) 2×4 #2&Btr price decreased by 9%, or US$32 per Mfbm, to US$308 per Mfbm in the current quarter, while price decreases in lower grade products were somewhat less pronounced. The average Random Lengths Southern Yellow Pine (“SYP”) 2×4 #2 price also experienced a decline compared to the fourth quarter of 2014, down US$14 per Mfbm, or 3%. Offshore lumber sales realizations also benefitted from the significantly weaker Canadian dollar during the first quarter of 2015.
Compared to the previous quarter, lumber production was up 15% reflecting the Company’s expansion in the US South, improved productivity at the Western SPF operations and additional operating hours in the first quarter of 2015. Lumber shipments were up 7% in the current quarter with higher lumber production offset in part by delayed
Tags: Confor, First Quarter, Result
