Canfor swings to Q2 profit
Canadian lumber giant Canfor reported second quarter sales of 1.115
billion Canadian dollars (US$831 million), marking a 17.8% decline from second quarter 2019 sales of C$1.313 billion (US$978.4 million).
The Vancouver, British Columbia-based company also reported a net income of C$60.7 million (US$45.2 million) for the second quarter in comparison to a net loss of C$48.8 million (US$36.4 million) for the same period a year ago.
Due to the COVID-19 crisis, Canfor took curtailment measures at sawmills during the quarter. The company reported that total lumber shipments of 1.15 billion board feet for the period were down 8% from the previous quarter. Also, total lumber production of 1.04 billion board feet is a 19% decline from the prior quarter.
During the second quarter, Canfor’s 70%-owned Vida Group subsidiary entered into an agreement to purchase three sawmills in Sweden. Canfor also completed its acquisition of Elliot Sawmilling Company during the quarter.
Canfor’s second quarter results included a C$80.6 million (US$60 million) recovery in lumber and log inventory write-down provisions, partly offset by a C$8.2 million (US$6.11 million) inventory write-down for its pulp and paper segment.
But a significant increase in lumber prices towards the end of the quarter and into July, combined with improved market demand over the same period, resulted in the full reversal of the recorded inventory write-down provision of C$80.6 million at the end of the second quarter of 2020, the company said.
The Bottom Line: Canfor swings to a second quarter profit of C$60.7 million following a net loss of C$48.4 million for the same period a year ago.
What the CEO said: “Having overcome the many challenges faced in the second quarter, it is encouraging to see the current strength of lumber demand and prices and we value the strong relationships we have with our global customers,” said Don Kayne, president and CEO of Canfor. “While markets appear strong for the third quarter, we remain somewhat cautious about the outlook thereafter, recognizing the inherent uncertainties created by COVID-19.”
Company info: Canfor’s full second quarter 2020 report is available here.