Canfor Corp. is reporting a net income of $373.8 million or $3.02 per share in its latest quarter, a considerable drop from its Q1 earnings of $534 million.
For the second quarter of 2022 the Vancouver-based company reported operating income of $531.6 million, down by $210.4 from its operating income of $741.9 million in the first three months of the year. Sales were up slightly from $2.213 billion in Q1 to $2.171 billion in Q2.
Adjusted profit growth also fell, from $529 million or $4.25 per share in Q1 to $379.7 million or $307 per share in Q2. By comparison, in second quarter of 2021, fuelled by surging lumber prices, Canfor earned a record $726.9 million or $5.81 per share.
This year’s second quarter results reflect a reduction in the company’s earnings from the lumber sector that were offset slightly by improved pulp and paper sales.
“Despite the pressures on North American lumber market fundamentals this was a strong quarter for our lumber business, as our results continue to far exceed pre-pandemic levels and we continue to capitalize on our global diversification strategy,” said Canfor president and chief executive officer Don Kayne.
“In our North American operations, ongoing global supply chain constraints resulted in the difficult decision to reduce operating schedules at our Western Canadian sawmills during the second quarter and into the summer months. We greatly appreciate our employees’ ongoing resilience in managing through these supply chain challenges. For our pulp business, some relief in transportation constraints late in the period enhanced our ability to realize near-record high pricing and recognize improved results in the quarter.”
West Fraser Timber also released its Q2 report which shows second-quarter earnings were $762 million or $759 per share, compared to $1.09 billion or $10.35 per share in Q1. The Vancouver company’s adjusted net income was $1.124 billion, down from $1.592 billion in the first quarter of 2022.
The company paid its shareholders $26 million in dividends in Q2 and announced it will increase its quarterly dividends to be paid in the third quarter, from 25 cents per share to 30 cents per share.
“West Fraser generated strong financial results again in the second quarter of 2022, supporting the return of more than $1.5 billion of capital to shareholders through share repurchases and our quarterly dividend,” said West Fraser president and CEO Ray Ferris.
“The acute transportation challenges facing the company in recent quarters showed signs of improvement in the second quarter, in large part because of the dedication and determination of our people. Even so, our ability to ship products in a timely manner to meet the demands of our customers is not where it needs to be and therefore transportation and logistics remain key focus areas for the company. Inflationary cost pressures persist across our various supply chains, although an environment of strong demand and above-average product pricing has helped to absorb most of these cost increases. And while we recognize the risks of near-term macro headwinds, including rising mortgage rates and elevated energy prices, we also note that demand for our products has been resilient, and we continue to see favourable long-term market fundamentals in support of our wood building products business.”