Canfor sees weak lumber market as chance to expand
VANCOUVER, British Columbia, Nov 2 (Reuters) - Canfor Corp (CFP.TO) sees North American lumber industry woes as a chance to buy assets even as it cuts back production at its own sawmills, its chief executive said on Friday.
Pope & Talbot Inc PTBT.PK, which filed for creditor protection this week, will likely not be the last lumber producer to fall victim to the slumping U.S. housing market, CEO James Shepard told analysts.
"Certainly there are going to be opportunities not just in Canada, but also in the United States. We will be looking at them carefully," said Shepard, adding that Canfor has been "very pleased" by its expansion into the U.S. Southeast.
Canfor purchased U.S.-based New South Companies Inc in 2006 in its first major expansion outside of Canada. In September it agreed to buy Chesterfield Lumber Co in South Carolina. Most of Canfor's Canadian mills are in British Columbia.
"I don't think it will be last man standing, but it will be last men standing, and we will definitely be one of them," Shepard said of the troubles facing Canadian forest-products companies.
Canfor is North America's third-largest producer of softwood lumber such as pine, spruce and fir, which is used largely for home construction.
Canfor announced on Thursday it plans to idle more mills in the fourth quarter to reduce production by 250 million board feet, and Shepard said there will likely be more curtailments next year to preserve cash.
"If the (lumber) market continues to ratchet down, we will continue to ratchet down. We will be market responsive. Full stop."
Shepard said Canfor has been able to make its mills more efficient, but the company does not expect to see a rebound in the U.S. home construction market for the "foreseeable future."
Canadian lumber mills have been hit by weak prices, the stronger Canadian dollar and the tax placed on lumber exports to the United States under the U.S.-Canada softwood lumber agreement.
Canfor has not identified the mills to be idled, and executives acknowledged they are balancing the need to cut lumber production while the company maintains contracts to supply pulp customers with woodchips and sawdust.
Canfor owns just over 50 percent of the Canfor Pulp Income Fund (CFX_u.TO), a major customer for chips and one of the few bright spots on Canfor's current balance sheet.
Canfor said on Thursday it had an operating loss of C$52.1 million ($56 million), in the third quarter against C$44.8 million in the year-before quarter. Its net loss was C$42.1 million, down from C$51.6 million the year before.
($1=$0.93 Canadian)
