Despite a strong rebound for lumber prices in the first half of the year, Vancouver’s major forestry companies are still facing a tough 2010.
On a conference call Friday morning, International Forest Products Ltd. (TSX:IFP.A) reported improved results in the second quarter of 2010, but remained cautious about the rest of the year.
Duncan Davies, Interfor’s president and CEO, said: “Looking out through the balance of this year we expect market conditions to remain quite uncertain.”
The company operates sawmills throughout B.C. and the U.S. Pacific Northwest, and reported a net loss of $600,000 (excluding a tax valuation allowance) in the second quarter compared with a $13.4 million loss for the same period in 2009.
Davies said lower activity levels and prices in late May and June offset gains early in the year.
Lumber prices dropped as low as US$188 per thousand board feet in late June from a peak of US$320 in April.
The company also said higher log prices in the U.S. and lower chip prices in the B.C. Interior also affected results, yet lumber production increased 7% to 277 million board feet for the quarter.
Interfor’s Grand Forks and Hammond Cedar sawmills continued to see curtailments, while the company’s Castlegar mill resumed operations earlier this month for the first time since 2008.
Vancouver-based West Fraser Timber Co. Ltd. (TSX:WFT) reported earnings after discontinued operations of $63 million or $1.46 per share for the second quarter of 2010. That’s compared with a $39 million loss for the same period in 2009.
West Fraser chairman, president and CEO Hank Ketcham said:"Although the improved results were driven largely by higher prices for all products, we benefited from higher production and shipments by our lumber division."
Still, the company predicted that lumber prices would soften for the remainder of the year as low U.S. housing starts “dampen” demand.