Interfor Corp. shares down more than nine per cent on third quarter results miss

VANCOUVER — Interfor Corp.’s share price was trading down more than 10 per cent Friday as the company missed earnings expectations amid volatile lumber prices.

“The dominating feature of the third quarter this year was the drop in lumber prices that began in late May and early June and continued unabated through the third quarter and into the fourth quarter,” said company chief executive Duncan Davies.

He said volatility this year has been unprecedented as logistical constraints and other factors rapidly drove western spruce composite prices up US$145 in the first five months of the year only to plunge US$280 since to a low of US$296 per thousand board feet.

“In our view, the current state of the lumber market makes little sense,” said Davies.

“The drop we’ve experienced in the last few months is more of an overreaction to an overreaction that occurred earlier this year.”

Prices appear to have bottomed though, said Davies, with some price gains recently.

Meanwhile, cost inflation in labour and materials has led Interfor to indefinitely shelve a new sawmill it was looking to build in the U.S. south, he said.

“Over the last number of months, it became, it’s become readily apparent to us that equipment lead times, contractor services, steel prices and a number of other cost factors were increasing to the point where we weren’t comfortable that we could generate the kind of returns that we felt were necessary.”

Davies said the price drop in the third quarter put pressure on earnings, though company profits of $28.1 million, or 40 cents per share were still up from earnings of $16.8 million or 24 cents per share for the same quarter last year.

Adjusted net earnings came in slightly higher at $28.24 million but still 40 cents per share, while analysts had expected earnings of $43.5 million or 44 cents per share according to Thomson Reuters Eikon.

The company’s share price was trading down $1.81 or 11.1 per cent at $14.48 in mid-afternoon trading on the Toronto Stock Exchange.

Interfor says it produced 14 million board feet less than the previous quarter after it instituted preventative downtime in the U.S. south ahead of hurricane Florence and production dropped in the U.S. northwest.

B.C. production rose by nine million board feet, but will see a planned 20-per-cent drop in production in the fourth quarter as the company cuts back due to declining lumber prices and higher log costs.

Just Posted

Alberta to face mild recession in 2019, bounce back in 2020

The Canadian economy is showing improvement, but Alberta economy is doing the… Continue reading

Vandal(s) smash front doors of Red Deer museum

Facility was closed briefly until repairs were done

Memorial plaques stolen from benches in downtown Red Deer parks

City staff found at least 25 metal plaques disappeared last weekend

No representation from supervised consumption service on new panel concerning: Turning Point in Red Deer

The executive director of Turning Point says she’s “a bit disappointed” in… Continue reading

Red Deer seeking further public input on transit network improvements

Proposed new routes, improved frequency, connectivity and accessibility are all part of… Continue reading

Your community calendar

Thursday The Red Deer and District Garden Club hosts its annual Flower… Continue reading

MLS awards expansion franchise to St. Louis for 2022 debut

The prospects of a Major League Soccer franchise ever calling St. Louis… Continue reading

A look at five prominent doping incidents involving Canadian athletes

Canoeist Laurence Vincent Lapointe is the latest Canadian Olympic medal hopeful to… Continue reading

Vancouver Canucks general manager Jim Benning signs three-year extension

VANCOUER, B.C. — Despite five seasons of mediocre on-ice results, Vancouver Canucks… Continue reading

Henderson back to defend CP Women’s Open title, 12-year-old Liu also in field

AURORA, Ont. — Brooke Henderson remembers being rather star-struck when she made… Continue reading

Alberta to limit oil production to end of 2020 as pipeline delays persist

CALGARY — The Alberta government says some oil companies may have to… Continue reading

Canadian banks to report ‘solid’ quarter amid trade tensions, strong employment

TORONTO — Trade uncertainty may weigh on the Canadian banks’ upcoming financial… Continue reading

Manufacturing sales beat forecasts in June despite falling 1.2%, says StatCan

Canadian factory activity beat expectations in June as manufacturing sales fell 1.2… Continue reading

Most Read