Canfor Reports Results for Second Quarter of 2021


  • Record quarterly reported operating income of $1.04 billion driven by unprecedented high lumber prices and a strong operating performance across all regions; record-high quarterly sales of $2.5 billion
  • Record shareholder net income of $727 million, or $5.81 per share
  • Net cash of $916 million at June 30, 2021; US$150 million repayment of term debt in the current quarter
  • Cumulative cash deposits of $645 million on countervailing and anti-dumping duties at June 30, 2021

Reflecting record-high lumber segment earnings and improved pulp and paper segment results, the Company reported operating income of $1,041.3 million for the second quarter of 2021, $438.7 million higher than the operating income of $602.6 million reported for the first quarter of 2021. For the lumber segment, earnings increased $393.8 million quarter-over-quarter, to an all-time high of $1,000.5 million.

Commenting on the Company’s second quarter results, Canfor’s President and Chief Executive Officer, Don Kayne, said, “Our lumber business generated exceptional financial results in the second quarter, with our solid operational performance enabling us to capitalize on strong global lumber fundamentals resulting in record-high operating earnings. Our pulp business successfully leveraged favourable pulp market conditions and improved productivity to record strong financial results for the quarter.”

Global lumber market conditions remained very strong in the second quarter of 2021, as tight supply coupled with significant demand drove global benchmark lumber prices to new unprecedented highs. This record pricing, combined with moderately higher shipment volumes, substantially outweighed the impact of modestly higher log costs in Western Canada.

Continued strong North American market fundamentals reflected sustained high levels of new home construction activity, despite a slight pull-back in the shift to suburban areas, as coronavirus (“COVID-19”) restrictions were gradually lifted. Demand in the North American repair and remodeling sector also showed continued strength early in the current quarter, but weakened over the balance of the period.

Results in the pulp and paper segment largely reflected materially higher Northern Bleached Softwood Kraft (“NBSK”) pulp unit sales realizations, and to a lesser extent, an 8% increase in shipments following transportation disruptions experienced in the first quarter of 2021. These factors more than offset the impact of the stronger Canadian dollar and market-related fibre cost increases in the current quarter.

Following the sharp improvement in market fundamentals earlier in the year, global pulp market conditions were more stable in the second quarter. Demand was solid through the first part of the current quarter but a moderation in purchasing activity from China saw some downward pressure on prices in that region, particularly in June.

The upward trend in NBSK US-dollar pulp list prices to China from the first quarter continued in April, with prices reaching a near-record high of US$995 per tonne in April, before declining in May and June, to end the quarter at US$910 per tonne. As a result, the current quarter US-dollar NBSK pulp list price to China averaged US$962 per tonne, up US$79 per tonne, or 9%, compared to the previous quarter. Prices to North America (before discounts) saw sharp increases in the current quarter, largely in response to the uplift in China prices earlier in the year, up US$296 per tonne, or 23%, from the previous quarter, to US$1,598 per tonne.

In the pulp and paper segment, global softwood kraft pulp markets are projected to soften somewhat through the third quarter of 2021, driven by the current tepid Chinese demand and above-average global pulp inventory levels combined with the traditionally slower summer months. Weakness experienced in the high yield Bleached ChemiThermo Mechanical Pulp (“BCTMP”) markets, especially in Asia, late in the second quarter is anticipated to continue early into the third quarter of 2021, before a projected stabilization in prices through the balance of the period.
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