Buoyed an "unexpected increase in demand and record global pricing," forest products producer Canfor recorded $574.6 million in adjusted net income for 2020, according to an update issued Wednesday.
The number represents a major turnaround from a $96.6-million loss for 2019 and translated into a gain of $4.59 per share, compared to a loss of $0.77 the year before.
Much of the gain was made in the third and fourth quarters, when the company recorded a total of $517.4 million in adjusted net income,
"The unprecedented challenges stemming from the coronavirus outbreak weighed heavily on results in the first half of 2020. However, through the second half of 2020 there were several positive developments, including an unexpected increase in demand and record global pricing," the company said in its quarterly report.
They included a "sustained increase in North American demand over the traditionally slower season, particularly in December."
Housing starts in the United States averaged nearly 1.6-million during the fourth quarter, up 11 per cent from the previous quarter. The rise reflected an 18-per cent increase in starts on single-family homes offset by a 10-per-cent decline in multi-family starts.
Single-family homes consume about three times the lumber that multi-family units do, the company said, and also noted "unusually high demand in the repair and remodeling sector."
Starts in Canada averaged 239,000 units on a seasonally adjusted basis, unchanged from the prior quarter.
It said the benchmark price for random-length spruce-pine-fir 2x4s #2 and better was extremely volatile over the fourth quarter, falling from an all-time high of US $955 per thousand board feet at the end of September to a low of $530 at the end of October then ending the year at $920 for an average of $700 and down $68 from the third quarter.
The pace is expected to continue during the first half of 2021.
"The ongoing effects from the COVID-19 pandemic are forecast to continue to influence consumer spending habits while favorable demographics driven by the millennial generation entering prime home buying years will also facilitate this strong lumber demand," Canfor said in the update.
On the pulp and paper side, a net loss of $22.4 million was record for the year and $10.2 million for the fourth quarter, compared to losses of $30.5 million and $19.5 million respectively during 2019.
Results for the fourth quarter "reflected continued soft market conditions and weak prices on pulp shipments" as well as downtime at the Northwood pulp mill to rebuild a lower furnace on a recovery boiler.
The work was completed in mid-January, Canfor said.
Canfor's adjusted net income for 2018 was $488.4 million ($3.83 per share) and in 2017 it was $363.4 million ($2.77 per share).
