Weak lumber market hits Canfor hard in Q3
Canadian lumber producer Canfor reported third quarter 2019 sales of 1.09 billion Canadian dollars (US$833 million), down more than 17% from sales of C$1.32 billion (US$1 billion) in the third quarter 2018.
The Vancouver, British Columbia-based company also reported a net loss of C$90.4 million (US$69.1 million) compared to a net income of C$125.3 million (US$95.8 million) for the same period last year.
In addition to weak Western SPF lumber prices, Canfor’s third quarter results include a net duty expense of C$53.5 million (US$40.9 million), at a combined countervailing duty and anti-dumping duty accrual rate of 29.24%.
Total lumber shipments, at 1.23 billion board feet, were 16% lower than the previous quarter due to weak market conditions. Total lumber production, at 1.18 billion board feet, was 15% lower than the previous quarter primarily due to curtailments and mill closures, which reduced Western SPF production capacity by approximately 37%.
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The bottom line: Weak market conditions result in a C$90.4 net loss for Canfor in the third quarter.
What the CEO said: “The ongoing tough market conditions made for another extremely challenging quarter for our Western SPF business and all of our employees” said Don Kayne, Canfor president and CEO. “However, despite the global lumber market challenges, our SYP and European businesses continued to deliver positive results in the third quarter and we expect that to continue through the balance of the year.
Kayne noted that Canfor expects to see a slow recovery in lumber prices toward the end of 2019 and in 2020 as demand steadily improves.
Company info: Canfor’s full third quarter 2019 report can be read here.
On Aug. 16, the company received an unsolicited and non-binding proposal from Great Pacific Capital Corp. to acquire all outstanding common shares of Canfor at a price of C$16 (US$12.23) per common share in a deal worth about C$981.6 million (US$750.7 million). Canfor’s board of directors has put a special committee of independent directors into action to review the offer.
The Vancouver, British Columbia-based company also reported a net loss of C$90.4 million (US$69.1 million) compared to a net income of C$125.3 million (US$95.8 million) for the same period last year.
In addition to weak Western SPF lumber prices, Canfor’s third quarter results include a net duty expense of C$53.5 million (US$40.9 million), at a combined countervailing duty and anti-dumping duty accrual rate of 29.24%.
Total lumber shipments, at 1.23 billion board feet, were 16% lower than the previous quarter due to weak market conditions. Total lumber production, at 1.18 billion board feet, was 15% lower than the previous quarter primarily due to curtailments and mill closures, which reduced Western SPF production capacity by approximately 37%.
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The bottom line: Weak market conditions result in a C$90.4 net loss for Canfor in the third quarter.
What the CEO said: “The ongoing tough market conditions made for another extremely challenging quarter for our Western SPF business and all of our employees” said Don Kayne, Canfor president and CEO. “However, despite the global lumber market challenges, our SYP and European businesses continued to deliver positive results in the third quarter and we expect that to continue through the balance of the year.
Kayne noted that Canfor expects to see a slow recovery in lumber prices toward the end of 2019 and in 2020 as demand steadily improves.
Company info: Canfor’s full third quarter 2019 report can be read here.
On Aug. 16, the company received an unsolicited and non-binding proposal from Great Pacific Capital Corp. to acquire all outstanding common shares of Canfor at a price of C$16 (US$12.23) per common share in a deal worth about C$981.6 million (US$750.7 million). Canfor’s board of directors has put a special committee of independent directors into action to review the offer.