Latest quarterly results from some of its leading players show the North American timber sector still facing tough market conditions.
Vancouver-based West Fraser, Canada’s largest softwood producer returned a loss for the first three months of 2009 of C$83m compared with a C$69m deficit in the same period last year. Sales for the quarter were around C$150m, down C$772m.
CEO Hank Ketcham said that the company’s log and lumber operations were hit by lower prices and inventory write-downs, while its panel arm was affected by falling benchmark prices in Canadian plywood and MDF.
Looking forward, Mr Ketcham said that lumber prices were showing some signs of improvement, but that it was too early to talk about recovery.
“Our markets and the economy in general continue to be fragile and our operating strategy will reflect this.”
Fellow Canadian lumber producer Interfor reported a first quarter loss of C$13.9m compared with a C$900,000 in 2008. This, said the company, reflected “extremely low demand and weak product pricing”. Particularly significant was the continuing weakness of the US housing market, where starts came in at a seasonally adjusted rate of 510,000 in March, 48% lower than 2008.
“Until balance is restored between supply and demand, we can expect the weak pricing environment to continue,” said CEO Duncan
Davies.
In the US, Plum Creek Timber an-nounced first-quarter earnings ahead US$119m at US$157m. But this was largely attributable to land sales by its real estate operation. Both its Northern and Southern Resources lumber operations were hit by lower harvest levels and weak prices, the former’s profits down from US$14m to US$2m and the latter US$37m to US$20m.
Weyerhaeuser releases its first quarter figures on May 5, but recently announced that it will close its Bay City log export operation due to weak demand for wood and wood products.
On a slightly more upbeat note, however, the company’s chief executive Dan Fuller said at its recent annual meeting that the US housing market was nearing its bottom and he expected it to make a modest recovery in 2010.
