Canadian sawmills' profits at bottom of pack: report

A softwood lumber sawmill in Saguenay, Que., in late 2008. (Jacques Boissinot/The Canadian Press)

Canadian sawmills had the lowest profit of any in the world last year and the losses at mills in Eastern Canada were "horrific," forest industry consultants said Tuesday.

The first quarter of 2009 was even worse, a news release based on the Global Lumber/Sawn Wood Cost Benchmarking Report - 2008 & Q1/2009 said. The biannual study is prepared by three consulting groups.

The report, which benchmarks timber and sawmill costs around the world, found that "average" Canadian sawmills had the lowest EBITDA — earnings before interest, taxes, depreciation and amortization, a measure of profit before financial charges — of any mills worldwide in 2008.

Canadian mills were hit by the collapse of the U.S. housing market, the strength of the Canadian dollar against the greenback and Canadian export taxes on U.S. shipments.

That, combined with high costs, pushed Eastern Canada mills to 2008 losses of $37 US per cubic metre.

But even the best-performing mills in the world, niche markets in South Africa, China and Northwest Russia, reported losses of $3 to $4 a cubic metre, the release said.

The average loss worldwide in 2008, $12 a cubic metre, rose to $14 in the first quarter this year. In 2006, sawmills worldwide made an average profit of $8 a cubic metre.

Global costs in 2008 jumped sharply to $75 a cubic metre from a much lower level in 2006. "Much lower operating rates and higher energy costs were the main cost drivers," the release said.

The report, based on log and sawmill cost data collected from more than 29 countries or regions on six continents, was produced by International WOOD Markets Group Inc. of Vancouver with assistance from international consultants PricewaterhouseCoopers LLP and the Beck Group of Portland, Ore.