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Canfor Reports Results for Second Quarter of 2015

by ahnationtalk on July 22, 2015793 Views

Press Releases

July 21, 2015 – Vancouver, B.C. – Canfor Corporation (TSX: CFP) today reported net income attributable to shareholders (“shareholder net income”) of $11.1 million, or $0.08 per share, for the second quarter of 2015, compared to $29.3 million, or $0.22 per share, for the first quarter of 2015 and $54.3 million, or $0.39 per share, for the second quarter of 2014. For the six months ended June 30, 2015, the Company’s shareholder net income was $40.4 million, or $0.30 per share, compared to shareholder net income of $99.8 million, or $0.72 per share, reported for the first half of 2014.

The following table summarizes selected financial information for the Company for the comparative periods:

(millions of Canadian dollars, except per share Q2 Q1 YTD Q2 YTD
amounts) 2015 2015 2015 2014 2014
Sales $ 952.4 $ 930.0 $ 1,882.4 $ 907.3 $ 1,649.2
Operating income before amortization $ 69.8 $ 133.0 $ 202.8 $ 141.3 $ 270.2
Operating income $ 17.6 $ 83.7 $ 101.3 $ 97.3 $ 181.7
Net income attributable to equity shareholders $ 11.1 $ 40.4
of the Company $ 29.3 $ 54.3 $ 99.8
Net income per share attributable to equity $ 0.08 $ 0.30
shareholders of the Company, basic and diluted $ 0.22 $ 0.39 $ 0.72
Adjusted shareholder net income (loss) $ (2.0) $ 46.5 $ 44.5 $ 56.7 $ 103.1
Adjusted shareholder net income (loss) per $ (0.02) $ 0.33
share, basic and diluted $ 0.35 $ 0.41 $ 0.74

After adjusting for items affecting comparability with the prior periods, the Company’s adjusted shareholder net loss for the second quarter of 2015 was $2.0 million, or $0.02 per share, compared to an adjusted shareholder net income of $46.5 million, or $0.35 per share, for the first quarter of 2015. Canfor’s adjusted shareholder net income for the second quarter of 2014 was $56.7 million, or $0.41 per share.

The Company reported operating income of $17.6 million for the second quarter of 2015, down $66.1 million compared to operating income of $83.7 million for the first quarter of 2015, with the decline reflecting lower operating earnings in both the lumber and pulp and paper segments. Lumber segment results were impacted by a decline in benchmark lumber prices, an average export tax of 7% on Canadian lumber shipments to the US and a slightly stronger Canadian dollar. These factors outweighed an increase in lumber shipments in the current quarter and the continued positive impact from the Company’s expanded presence in the US South, including the recent acquisition of Southern Lumber Inc. (“Southern Lumber”) on April 1, 2015. Pulp and paper segment results were also lower than the previous quarter, principally due to scheduled maintenance outages in the current quarter and lower unit sales realizations in all regions.

The decline in Western Spruce/Pine/Fir (“SPF”) lumber prices seen in the first quarter of the year continued into the second quarter with the average benchmark Western SPF 2×4 #2&Btr price decreasing by US$89 per Mfbm, or 26%, from the beginning of the year through the end of May. In June, Western SPF prices picked up as North American demand improved and various production curtailments in the industry took effect. Southern Yellow Pine (“SYP”) East lumber prices have also declined since the beginning of the year but at a more gradual pace than the Western SPF benchmark. US housing starts in the current quarter averaged 1,144,000 units SAAR (seasonally adjusted annual rate), up 17% from the previous quarter, which in part reflected an increase in construction activity from the first quarter when home building levels were hampered by challenging weather. In Canada, housing starts averaged 193,000 units SAAR in the current quarter, up 9% from the previous quarter. Lumber offshore markets were steady in the current quarter with prices holding up relatively well compared to North America.

Lower lumber unit sales realizations in the current quarter compared to the first quarter of 2015 reflected weaker North American benchmark prices for both Western SPF and SYP dimension products, and, to a lesser extent, a 1% stronger Canadian dollar. Lumber price declines were most pronounced for narrow widths, as evidenced by the quarter-over-quarter decreases of US$38 per Mfbm, or 12%, and US$30 per Mfbm, or 7%, for the Western SPF 2×4 #2&Btr and SYP East 2×4 #2 products, respectively. Overall wide dimension and most lower grade lumber products saw more modest price declines compared to the previous quarter. Unit sales realizations in the US South in the current quarter benefited from a higher-value sales mix, resulting from the Company’s recent acquisitions. Canfor’s offshore lumber sales realizations held up relatively well compared to North American sales realizations, in part reflecting a more diverse product offering to offshore markets as well as the nature of pricing, much of which is negotiated monthly or quarterly in advance.

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