Canfor- a bit of a surprise
Canfor recently released it's fourth quarter and annual results.The results were nicely summarised on a table on the first page.It showed the sales, income,and earningsper share for the quarter,same quarter last year,previous quarter,the year and last year.The table showed that while sales were up 14%from Q3,operating income was up 50%while net income was constant but earnings per share were up 95%.A strange mix.Nevertheless annual earnings were a whopping $1.61 per share.However earnings per share for the quarter were only $.35.In order for Canfor to sustain the annual earnings it needs to produce about $.40 per share in the next quarter.Q1 is usually a strong quarter for lumber producers but can they do it next quarter?
The next quarter
There are a number of factors that indicate Canfor will be able to beat earnings for this last quarter.It has upgraded it's McKenzie,Elko and Northward Pulp mills.It had higher pulp production in 2013 and should for 2014.Canadian housing starts are expected to be up by 5% and this will mean higher lumber production.Offshore markets(including China, Japan,and emerging markets) should remain solid.Lastly Canfor has repaid a lot of debt;it's debt to capitalization ratio is a meagre 10%.This certainly helps to keep costs down.Also American lumber markets appear to be as solid as last quarter.
The spring
Canfor needs the prices this spring to follow the traditional patterns and move up somewhat-both for lumber and for pulp.Their low debt to capital rate and their modernized mills will keep their costs down.But the question remains - can Canfor count on the emerging markets including China and Japan?Also if these markets remain healthy can they increase production at less cost per unit of production.Or can Canfor's new equipment bring in the next quarter at $.40 a share.We think they can! see Blogdaleupsome for results on forest companies
The next quarter
There are a number of factors that indicate Canfor will be able to beat earnings for this last quarter.It has upgraded it's McKenzie,Elko and Northward Pulp mills.It had higher pulp production in 2013 and should for 2014.Canadian housing starts are expected to be up by 5% and this will mean higher lumber production.Offshore markets(including China, Japan,and emerging markets) should remain solid.Lastly Canfor has repaid a lot of debt;it's debt to capitalization ratio is a meagre 10%.This certainly helps to keep costs down.Also American lumber markets appear to be as solid as last quarter.
The spring
Canfor needs the prices this spring to follow the traditional patterns and move up somewhat-both for lumber and for pulp.Their low debt to capital rate and their modernized mills will keep their costs down.But the question remains - can Canfor count on the emerging markets including China and Japan?Also if these markets remain healthy can they increase production at less cost per unit of production.Or can Canfor's new equipment bring in the next quarter at $.40 a share.We think they can! see Blogdaleupsome for results on forest companies
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