The CEO of Interfor Corp. says profits from strong lumber markets mean the company is well-positioned to add to its stable of sawmills in Canada and the United States through acquisition.
Ian Fillinger says the Burnaby, B.C.-based company has a “lead-with-lumber” growth strategy but it will also consider buying mills that have attached businesses such as plywood, wood pellets or engineered wood products.
Interfor is reporting fourth-quarter net income of $149 million on sales of $662 million, up from a net loss of $41.7 million on sales of $457 million in the same three months of 2019. It beat analyst expectations for a profit of $127 million on sales of $660 million, according to financial data firm Refinitiv.
In a report, RBC analyst Paul Quinn said Interfor had lower-than-expected lumber sales but that was more than offset by higher-than-expected log and chip revenue.
The company reported producing 687 million board feet of lumber in the fourth quarter, up from 668 million in the year-earlier period and from 642 million in the third quarter.
Its average price per thousand board feet was $842, up from $566 in the fourth quarter of 2019 but down from $910 in the third quarter.
“We recorded one of our highest production volume quarters in Interfor’s history but we did so with two less mills in our portfolio than the last time we reached these levels,” said Fillinger on a conference call on Friday, crediting operational improvements.
Interfor said it expects lumber demand in North America to continue to grow over the midterm, as repair and renovation activities and U.S. housing starts benefit from favourable underlying economic trends.