Near record lumber prices helped boost Canfor’s first quarter earnings but its western Canadian sawmills remain closed one day a week as it continues to cope with transportation and supply chain problems.
Compared to an operating loss of $66.8 million in the last quarter of 2021, the company posted income of $741.9 million for January to March this year.
“We are very pleased to see the sustained strength in global lumber markets continuing into 2022 and while our pulp business continued to face challenges, we also saw improved results in the quarter,” reported Canfor president and chief executive officer Don Kayne as the company released its first quarter results on May 3.
But Kayne tempered that remark by saying “the global supply chain crisis continues to negatively impact our operations and has resulted in curtailed and reduced lumber and pulp operation schedules. We will continue to assess the effects of this crisis and will make adjustments to our operating schedules as conditions evolve.”
“We greatly appreciate our employees’ ongoing resilience in managing through the supply chain challenges,” Kayne said.
Canfor’s mill in Houston and others in western Canada have gone through a cycle of closures either one day a week for several weeks at a time going back three years with the company citing high logging costs, disruptions caused by wildfires and transportation bottlenecks affecting its ability to get products to customers.
The last partial closure took hold in early April.
The company said a tight North American supply, combined with supply chain disruptions, helped explain the increased price in lumber in the first quarter of this year.
“Towards the end of the current quarter, however, elevated material costs, tied to the raised benchmark lumber prices, combined with growing concerns around housing affordability and higher interest rates, dampened consumer spending in the “do-it-yourself” sector,” indicated the company.
In looking ahead, Canfor did note second quarter results would reflect the ongoing partial closures and that it will “continue to closely monitor the supply chain situation and will adjust future lumber operating schedules, as appropriate, through the balance of the second quarter and into the latter half of 2022.”
Close to home, second quarter results will also reflect the shut down of a portion of the Plateau mill near Vanderhoof and the annual production loss of 150 million board feet of lumber.