West Fraser Timber CEO says recovery slow

The head of West Fraser Timber warned Tuesday that demand for lumber can be volatile through the winter as the recovery in the U.S. housing market continues to be slow.

VANCOUVER — The head of West Fraser Timber warned Tuesday that demand for lumber can be volatile through the winter as the recovery in the U.S. housing market continues to be slow.

Lumber prices were up in the third quarter, helping boost the Vancouver-based company’s revenue and profit, but West Fraser CEO Ted Seraphim told analysts that he was wary.

“Lumber demand has been relatively strong in October,” he said. “Nevertheless, we are still early in the recovery of the housing market and as such, we should expect some volatility in lumber and panel markets over the winter.”

Last week, West Fraser announced a plan to close its mill in Houston, B.C., due to the widespread damage caused by the mountain pine beetle infestation. The move resulted in 225 job losses.

The closure is part of a larger plan including a timber tenure swap with Canfor to help provide some security to its mills in Quesnel, Smithers and Fraser Lake, B.C.

Seraphim said the company would do its best to help the workers in Houston find work at other West Fraser operations and provide some help to relocate to the new jobs before the mill is shut down likely in May.

“It is a decision that we had to make, but I’ve got to tell you we don’t feel very good about it,” he said.

Canadian lumber producers were hit hard when U.S. homebuilders slowed construction to a crawl during the economic downturn, which was deeper and longer south of the border than in Canada.

However, the U.S. housing market has shown some life recently.

The U.S. reported last month that builders started work in August on the most single-family homes in six months.

Overall, U.S. builders broke ground in August on houses and apartments at an annual rate of 891,000, up from a rate of 883,000 from July. Housing starts in August were 19 per cent higher than a year earlier.

West Fraser has lumber, wood panel, pulp and newsprint operations in Western Canada — including West Fraser LVL at Rocky Mountain House and Sundre Forest Products — and in the southern United States.

It reported on Monday that it earned $55 million or $1.29 per share on sales of $878 million in the quarter ended Sept. 30.

That compared with a profit of $52 million or $1.21 per share on sales of $772 million a year ago.

Analysts on average had expected a profit of $1.35 per share, according to Thomson Reuters.

RBC Capital Markets analyst Paul Quinn noted that while lumber prices are off their highs of the year set in late March, they are up 25 per cent over the last four months.

“Capacity constraints are real in the form of lower timber harvests through mountain pine beetle related reductions in B.C. and lower harvest allocations in Quebec/Ontario,” Quinn wrote in a note to clients.

“The implications of lower supply and higher demand from sustained export growth and the U.S. housing recovery are clear, with much higher lumber prices as a result.”

Shares in West Fraser (TSX:WFT) climbed nearly five per cent, or $4.15, to $91.72 in late-afternoon trading on the Toronto Stock Exchange.

Just Posted

Red Deer’s capital budget talks start amid gloomy forecasts

Failing Kinex Arena will need replacement soon: city manager

Jamie Koe rink kicked out of Red Deer Curling Classic

Skip Jamie Koe and his team from Yellowknife, N.W.T., was ejected from… Continue reading

Red Deer’s Christmas Wish Breakfast helps children by collecting toys

Donations go to Red Deer Salvation Army and Red Deer Christmas Bureau

‘Fantastic Beasts’ flies to top of weekend box office

LOS ANGELES — “Fantastic Beasts: The Crimes of Grindelwald” crawled, slithered and… Continue reading

Canadian dead more than a week after plane crash in Guyana: Global Affairs

A Canadian citizen who was aboard a plane that crashed through a… Continue reading

VIDEO: Stan Lee leaves posthumous message for his fans

Marvel Comics’ co-creator died on Monday at the age of 95

Death of young Thai kickboxer brings focus on dangers

BANGKOK — The sight of two preteen boys pummeling each other with… Continue reading

Teenage driver survives spectacular crash at F3 Macau GP

MACAU — Teenage driver Sophia Floersch was set to undergo surgery Monday… Continue reading

David’s Bridal files for bankruptcy, but your order is safe

David’s Bridal is filing for bankruptcy protection but there is no danger… Continue reading

Taiwan president defends pro-independence film award winner

BEIJING — Taiwan’s president expressed her support for the prestigious Golden Horse… Continue reading

Pamela Anderson calls Australian PM’s comments ‘smutty’

LOS ANGELES — Pamela Anderson is criticizing Australia’s prime minister for making… Continue reading

Trump on Khashoggi death tape: ‘No reason for me to hear it’

WASHINGTON — President Donald Trump said there is no reason for him… Continue reading

Searchers in California fires step up efforts ahead of rain

CHICO, Calif. — Searchers combing a Northern California town levelled by a… Continue reading

Disney details new ‘Star Wars: Galaxy’s Edge’ attractions

ORLANDO, Fla. — “Star Wars” fans will soon be able to pilot… Continue reading

Most Read