Interfor Sawmills in $24 Million Expansion

VANCOUVER, BC - International Forest Products (TSX:IFP.A) reported a net loss first quarter of $6.5 million, exactly the same loss as fourth quarter 2011. Sales were $186.7 million, up from 176.8 million in first quarter 2011. 

Also known as Interfor, the wood products firm is installing a new small log line at its Grand Forks mill and an automated lumber grading system at its Castlegar mill.

To be completed in the first quarter of 2013, the mills will operate with a combined two-shift capacity of 375 million board feet per year.

Interfor has operations in British Columbia, Washington and Oregon, including two sawmills in the Coastal region of British Columbia, three in the BC Interior, two in Washington and two in Oregon.

Excluding a tax allowances and other one-time items, Interfor recorded a net loss of $5.2 million compared to a net loss of $3.7 million fourth quarter 2011; and a $1.7 million loss in the first quarter of 2011.

Sales fell $2 million, a 1 percent drop, from fourth quarter 2011, and log costs were higher, particularly on the British Columbia Coast.

Lumber production in the first quarter was 323 million board feet, up 29 million board feet or 10 percent compared to the immediately preceding quarter, reflecting increased volumes in each of the Company's operating regions. Sales volume, including wholesale activities, was 320 million board feet, up 2 million board feet compared with the fourth quarter.

In the quarter, SPF 2x4 in the North American market averaged US$266 per mfbm, up US$28 per mfbm versus the fourth quarter, and Hem-Fir studs were $US294 per mfbm, up US$34 per mfbm.

Activity levels in China remained strong and sales values improved as the quarter progressed. Japan, however, experienced a modest slowing of activities as winter conditions impacted building activity in that market.

Pricing in Japan was adversely affected by a weakening of the Yen/US dollar ratio while the cedar market was firm as mild weather in North America and low inventories throughout the distribution channel helped to support demand.

In spite of promising economic news in the U.S. in recent months only modest improvements in the U.S. housing market are expected in 2012. Canadian housing markets are forecast to moderate over the balance of the year.

The economic outlook for China appears less robust in 2012 compared to recent years, with the Chinese government scaling back economic growth targets to 7.5%, although the pace of lumber imports is expected to continue to grow.

Activity levels in Japan are expected to improve as the year progresses as reconstruction in the areas impacted by the March 2011 earthquake and tsunami gets underway.