October 28, 2010 / 9:46 PM / 7 years ago

UPDATE 1-Canfor posts surprise Q3 profit on China lumber demand

* Q3 adj EPS C$0.08/shr vs est loss/shr C$0.02

* Sales up 13 percent to C$588.7 mln

* Sees higher demand from China in Q4

Oct 28 (Reuters) - Canadian forest products company Canfor Corp (CFP.TO) posted a surprise third-quarter profit on strong lumber demand from China, which offset the sluggish performance of North American markets.

The company continues to sees strong demand from Asia, especially China, through the year, while North American lumber demand is expected to remain steady on the continued overhang of unsold home inventory.

“Several end-use markets in China are now solidly established and are expected to result in higher lumber demand in the fourth quarter,” Canfor said.

For the July-September quarter, the company reported net income of C$5.6 million, or 4 Canadian cents a share, compared with a loss of C$5.2 million, or 4 Canadian cents a share, a year ago.

The company reported adjusted net income of 8 Canadian cents per share.

Canfor, the one of the largest producer of softwood lumber in Canada, said its sales rose 13 percent to C$588.7 million. Lumber sales were up 10 percent to $308.3 million.

Analysts on average expected the company to report loss of 2 Canadian cents a share for the quarter on revenue of C$585 million, according to Thomson Reuters I/B/E/S.

The Vancouver-based company has about 30 facilities located in British Columbia, Alberta and Quebec and produces kraft paper, plywood, and a range of specialized wood products.

Canfor shares, which have gained about 8 percent in the last three months, underperforming broader S&P TSX Canadian Materials Index’s .GSPTTMT 24 percent growth, closed at C$9.6 Thursday on the Toronto Stock Exchange. (Reporting by Ashutosh Joshi in Bangalore; Editing by Don Sebastian)

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