October 25, 2010 / 9:16 PM / 7 years ago

UPDATE 1-West Fraser posts profit on record pulp output

* West Fraser had record pulp production in quarter

* Lumber prices dipped, but shipments held up (Adds details)

VANCOUVER, Oct 25 (Reuters) - West Fraser Timber Co Ltd WFT.TO posted a quarterly profit on Monday and said pulp and lumber markets were strong enough to support the dividend and capital spending increases it announced last month.

North America’s largest softwood producer said it earned C$45 million ($44 million), or C$1.04 a diluted share, in the third quarter. That compared with a loss of C$199 million, or C$4.64 a share, including one-time charges, in the year-before quarter.

Sales in the quarter were C$707 million, up from C$612 million a year earlier.

The Vancouver-based company, which has operations in Western Canada and the U.S. South, said that while the recovery of the U.S. housing market remained slow, pulp prices indicated the economy was recovering.

West Fraser said it produced a record 300,000 tonnes of pulp in the quarter as the benchmark U.S. price for NBSK pulp increased to $1,000 per tonne from $993.

Lumber prices, which had jumped in the first half of 2010 on inventory restocking, lagged in the third quarter, but shipments remained level with the second quarter and were 10 percent higher than a year earlier, West Fraser said.

West Fraser’s Western Canadian sawmills operated at near capacity during the quarter, but its U.S. sawmills were running at only about 75 percent of capacity because of uncertain markets.

West Fraser doubled its quarterly dividend to 6 cents a share in September, and approved C$125 million in new capital spending, saying it was taking advantage of improved cash flows.

$1=$1.02 Canadian Reporting Allan Dowd, Editing by Peter Galloway

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