Monthly Archives: April 2018

Our lumber segment generated operating earnings of $189 million (Q4-17 – $232 million) and Adjusted EBITDA of $282 million (Q4-17 – $258 million).  This quarter’s results were unfavorably impacted by severe winter weather, significant transportation challenges and a full quarter of export duties.  …Our panels segment generated operating earnings in the quarter of $25 million (Q4-17 – $20 million) and Adjusted EBITDA of $28 million (Q4-17 – $24 million).  The plywood market was strong throughout the quarter with pricing well ahead of 2017 levels.  Plywood shipments were held back by transportation challenges as well. Our pulp & paper segment generated operating earnings of $58 million (Q4-17 – $48 million) and Adjusted EBITDA of $70 million (Q4-17 – $60 million).  The major factors contributing to the increase in operating earnings were higher Canadian dollar pulp prices and an increase in NBSK shipments offset by lower BCTMP shipments, again due to transportation headwinds.

The annual WOOD Markets’ “Billion Board Foot Club” list of top global lumber companies showed further gains in production by 10 of the 13 companies making the list in 2017 (as compared to 2016 output). Three companies recorded output declines despite robust U.S. – as well as export – market demand (this was due mainly to timber supply issues in the B.C. Interior, the U.S. West and Chile). The largest North American firms increased their output, mainly because of mill capex programs or shifting at existing operations. There was only one major sawmill company acquisition in 2017: West Fraser’s purchase of Gilman. The average rise in production was only 2.3% for the 13 companies on the list — a slower pace than in the last three years. The list is based on companies with reported softwood lumber production exceeding one billion board feet (bf) on a nominal basis (or, for mills outside North America, more than ~2.3 million m³).

The Mackenzie Pulp Mill Corporation has been fined $900,000.  This comes following two instances in 2014 that saw the mill’s treatment system overwhelmed, causing toxic effluent exceedance in Williston Lake where the mill sits. “Beyond the fine which was agreed to [April 19th, 2018], the company was also ordered to complete an independent audit of its operations at the mill, paying particular attention to the effluent that comes from the mill,” explains Environmental Enforcement Directorate Regional Director Marko Goluza. …The payout will not be going to waste, so to speak. Goluza says it will help out with a specific cause in the province. “The $900,000 core penalty will be directed to the Environmental Damages Fund and, in this case, it was actually flagged to be used for conservation of fish and fish habitat in the Omineca region of British Columbia specifically.”

VANCOUVER – Canfor Pulp Products Inc. today reported first quarter 2018 results and quarterly dividend. The Company reported operating income of $85.1 million for the first quarter of 2018, an increase of $18.3 million from the $66.8 million reported in the fourth quarter of 2017 as the benefit of near-record high US-dollar pricing for Northern Bleached Softwood Kraft pulp and improved productivity in the latter part of the quarter more than offset challenges presented by severe winter weather in Western Canada earlier in the period, and the effects of major transportation disruptions to all the Company’s operations through the quarter.

VANCOUVER – Canfor Corporation today reported first quarter 2018 results.  The Company reported operating income of $203.8 million for the first quarter of 2018, down $10.4 million from reported operating income of $214.2 million for the fourth quarter of 2017, as lower operating earnings for the lumber segment were offset in part by record-high operating earnings for the pulp and paper segment.  Reported results in the first quarter of 2018 include a net duty expense of $34.9 million, at a combined effective countervailing duty (CVD) and anti-dumping duty (ADD) rate of 14.34%.  This compares to a net duty recovery of $23.4 million in the fourth quarter of 2017 reflecting the year-to-date true-up of preliminary CVD and ADD rates to current rates following final determinations announced by the US Department of Commerce and US International Trade Commission.

Alberta’s forestry sector, already facing challenges from softwood tariffs imposed by the United States and the growing threat of the mountain pine beetle, fears a labour disruption at CP Rail could make a tough situation even worse. “We have a challenge in getting rail cars at the moment — the rail system in Canada is maxed out,” said Paul Whittaker, the CEO of the Alberta Forest Products Association. Lumber producers have been hit by the same backlog of rail cars as the agriculture sector, leading to large stockpiles at sawmills and lost profits. “Only about half the number of rail cars we are seeking are arriving at the mills,” Whittaker said. A potential strike was averted over the weekend after the federal government ordered CP Rail’s two main unions to vote on the company’s final contract offer. The unions are urging their members to reject the deal.

The $10-million Skeena Sawmills canter line upgrade has been delayed due to the poor condition of a number of old sawmill buildings, exposed during last winter’s periods of heavy snowfall. Operations vice president Roger Keery said the mill is re-engineering its plans and has structural upgrades in mind for the existing sawmill building, which will take place before the mill moves forward with its modernization. “We had some problems with old buildings over the winter,” said Keery. “With the snow we had, some of the weaknesses in our older buildings became obvious. Our original plan was to use the existing buildings, but we are rethinking that now.” Engineers from McElhanney Consulting Services are meeting with Keery to look at re-engineering the project — deciding how to proceed.

Jean-Jacques Ruest

Canadian National Railway Co.’s new boss is moving quickly to overcome service shortcomings that have curtailed profit and angered customers.  The company is weighing the purchase of 500 “centerbeam” cars to accommodate rising lumber shipments and more than 500 hopper cars to renew the grain-hauling fleet starting next year, said interim Chief Executive Officer Jean-Jacques Ruest. Canada’s largest railroad is also in talks with General Electric Co. to speed locomotive deliveries and potentially exercise an option for 60 more. Ruest, who took over as CEO last month after the surprise exit of Luc Jobin, is rushing to cope with a surge in freight traffic that has slowed operations and prompted complaints from customers such as farmers and oil producers. “What we are doing is rebuilding capacity that’s needed to address a very strong economy, especially in Western Canada,” Ruest said.