July 30, 2008 / 9:39 PM / in 10 years

West Fraser, Canfor post profits, but still gloomy

VANCOUVER, British Columbia, July 30 (Reuters) - North American lumber producers West Fraser Timber Co (WFT.TO) and Canfor Corp (CFP.TO) posted second-quarter profits on Wednesday, but both said their earnings did not reflect improved market conditions.

The companies, which are the top two softwood lumber producers in Canada, said their bottom lines were boosted by accounting gains and items such as the reduction of log inventories whose value had been already been written down.

West Fraser reported a net profit of C$3 million, or 8 Canadian cents a share, on sales of C$823 million. That compared with a loss of C$14 million, or 33 Canadian cents a share, on sales of C$948 million a year ago.

Chief Executive Hank Ketcham cautioned that the profit did not mean lumber markets had rebounded, and said the company does not expect the U.S. housing construction market to recover until 2009, at the earliest.

“Our first-half loss of C$65 million is a better indicator of the severity of the current downturn and the effect a strong Canadian dollar has on our business,” Ketcham said in a statement.

Canfor said it earned C$64.2 million ($62.9 million), or 45 Canadian cents a share, in the quarter. That compared with a net loss of C$38.8 million, or 27 Canadian cents a share, in the same period a year earlier.

    The results included accounting items that boosted net results by C$85 million, or 60 Canadian cents a share, the company said.

    Among the gains Canfor recorded was C$36.3 million in net insurance proceeds it is expecting because of a fire in May that destroyed its North Central Plywoods mill in Prince George, British Columbia.

    Canfor said it does not expect any recovery in the U.S. housing market until the middle of 2009, at the earliest.

    $1=$1.02 Canadian Reporting by Allan Dowd, editing by Rob Wilson

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