B.C.’s big three forestry giants had lumber and other wood product sales of $6.5 billion in the second quarter of 2022, and net income of $1.4 billion, according to second quarter financials.
While second quarter earnings were down compared to Q1, due to lower lumber prices, demand and prices for lumber were still strong in the second quarter.
B.C.’s biggest forestry company, West Fraser Timber (TSX, NYSE:WFG), reported sales of $2.9 billion in the second quarter, and earnings of $762 million, which was down from $1 billion in earnings in the first quarter.
Canfor Corp. (TSX:CFP) reported Q2 sales of $2.2 billion and net income of $373 million.
Interfor Corp. (TSX:IFP) reported sales of $1.4 billion and net income of $270 million.
West Fraser rewarded shareholders with a major share buyback worth $1.5 billion.
“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 CEO Ray Ferris.
In the first few months of 2022, North American lumber prices hit record highs of $1,700 per thousand board feet, according to Trading Economics.
Western spruce-pine-fir lumber was selling at around $1,300 per thousand board feet earlier this year, according to Natural Resources Canada. Those prices are now down to about $680 per thousand board feet – still well above the long-term average of about US$300 per board feet ($385 Canadian.)
Interfor notes in its financials that of the 1 billion board feet of lumber it produced in Q2, about one-quarter was from its new Eastern Canadian operations – 211 million board feet. Its American sawmills accounted for 630 million board feet.
“Production in the B.C. region decreased to 174 million board feet from 196 million board feet in Q1’22, in part due to the sale of the Acorn sawmill during the quarter,” Interfor notes.
With the sale of its Acorn mill in Delta to an affiliate of San Industries Ltd., Interfor is now reviewing its coastal timber holdings.
“Interfor is currently undertaking a strategic review of its remaining Coastal B.C. operations, which consist solely of timber harvesting and sales related to its 1.67 million cubic meters of annual harvesting rights,” the company said.
Despite fears of a cooling North American economy, Canfor says in its Q2 financials that it expects lumber fundamentals to remain strong into the third quarter.
“Looking ahead, global lumber market fundamentals are anticipated to be relatively solid through the third quarter of 2022," the company says. "New home construction activity in North America is projected to weaken in the wake of high mortgage rates and decreasing housing affordability, particularly for first-time homebuyers, while activity in the repair and remodeling sector is estimated to be steady.”
In its Q2 financials, Canfor reported paying $96 million in American softwood lumber duties for the first half of 2022. Interfor reports paying $82 million in American duties in the first half of 2020; West Fraser reports paying $43 million.
