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Mixed Q2 earnings for Canadian forest products companies

Canadian forest products companies reported mixed earnings for the second quarter of 2014, with integrated producers, especially those with a building products focus, reporting the strongest results, according to PwC’s Net Earnings…

Canadian forest products companies reported mixed earnings for the second quarter of 2014, with integrated producers, especially those with a building products focus, reporting the strongest results, according to PwC’s Net Earnings Summary.

PwC analysts note that US housing starts statistics for June were about 6% below the average year-to-date trend. Due to the continued slow recovery in the U.S., 2014 is expected to become the seventh consecutive year in which U.S. housing starts remain below the 1,000,000 unit level.

PwC comments that softwood pulp prices were fairly stable while hardwood pulp continued to

decline in most markets. Newsprint prices remained stable despite weak export markets and paper prices were mixed.

According to PwC, Western Canadian based companies posted net earnings of $180.4 million in the second quarter of 2014, up from net earnings of $161.7 million in the first quarter but down from net earnings of $383.8 million in the second quarter of 2013. Canfor and Western Forest Products continued their strong starts to 2014, reporting second quarter earnings of $64.5 million and $29.2 million respectively.

Fortress Paper reported a net loss of $20.8 million, compared to losses of $23.4 million in the first quarter of 2014 and earnings of $134.1 million in the second quarter of 2013.

PwC reports that Eastern Canadian based companies posted net losses of $42.0 million in the quarter, compared to net losses of $76.4 million in the first quarter of 2014 and net earnings of $3.0 million in the second quarter of 2013. Tembec reported net earnings of $30.0 million, compared to losses of $28.0 million reported for the first quarter of 2014.

Cascades reported a net loss of $83.0 million, compared to losses of $1.0 million in the first quarter of 2014 and earnings of $2.0 million in the second quarter of 2013. Cascades’ second quarter net earnings were influenced by a $43 million impairment charge and a $44 million loss on the refinancing of senior notes.

Further afield, ten of the largest U.S.-based forest and paper companies reported net earnings of US $1.38 billion for the second quarter of 2014, up from US $1.32 billion in the second

quarter of 2013. In Europe, nine of the largest European based forest and paper companies reported net earnings of € 619.8 million for the second quarter of 2014, down from € 670.3 million in the first quarter of 2014, but well up from earnings of € 367.8 million reported in the second quarter of 2013.

The Net Earnings Summary has been prepared by PwC based on financial statements and other sources issued by the selected companies. Earnings are reported in regional currencies.