Canfor Corp. (TSX: CFP) had record quarterly profits in the first quarter of 2021, thanks to record high North American lumber prices.
In its first quarter financials for 2021, Canfor recorded sales of $1.9 billion – an increase of $771 million over Q1 2020. It netted $428 million in net income Q1, compared to a $70 million loss in Q1 2020.
The company attributed the increased profits to a residential construction and renovation boom in the U.S. and Canada, and a “lean” lumber supply that has pushed lumber prices past all-time highs. The company noted that markets for pulp have also improved.
“In the lumber segment, earnings increased $145.7 million quarter-over-quarter, to an all-time high $606.7 million,” the company notes.
“This unprecedented pricing substantially outweighed the impacts of higher market-related log costs in Western Canada.”
“The North American market continued to benefit from new home construction activity that reflected the ongoing urban-to-suburban shift, strong demand in the repair and remodeling sector and lean inventory in the supply chain.”
“For the current quarter overall, U.S. housing starts averaged 1,613,000 units on a seasonally adjusted basis, up 2% from the previous quarter, and in March approached a fifteen-year high of 1,739,000 units.
"In Canada, housing starts were up 28% from the previous quarter, averaging 308,000 units on a seasonally adjusted basis in the first quarter of 2021, largely reflecting a significant up-tick in the Western Canadian market, and reaching an all-time record of 335,000 units in March.
“Looking ahead, global lumber market fundamentals are anticipated to remain solid, with ongoing strength in new home construction and steady repair and remodeling activity projected to continue through the second quarter of 2021.”
Canfor noted the prospects for pulp have also improved.
“During the first quarter of 2021, global pulp markets experienced a surge in US-dollar list prices in response to an uptick in demand, particularly from China.”