Canadian Forestry Companies' Sales Are Slowing, Analyst SaysNew York, June 28 (Bloomberg) -- Sales of Canadian forestry companies, including Nexfor Inc. and Canfor Corp., will fall in the second half as U.S. housing starts slow and interest rates rise, limiting demand for lumber, Goldman, Sachs & Co. analyst Andrew Root said.
U.S. sales of new single-family homes are expected to fall in May for the second consecutive month, according to a Bloomberg News survey. In the second half, housing starts could decline as much as 15 percent from this year's peak, Root estimates.
``You can really feel the momentum slowing,'' he said in an interview. ``The companies that are most exposed to building products and building products prices are going to be struggling in the second half.''
Root reduced his second-half earnings estimates for Canfor by 19 percent, Alliance Forest Products Inc. by 6 percent, West Fraser Timber Co. by 5 percent and Nexfor by 4 percent. Canfor will be hardest hit because the company relies more than the others on lumber sales, Root said. He cut his second-quarter earnings estimates for West Fraser and Canfor.
Nexfor fell C$0.05 to C$7.75 in late morning trading. Canfor fell C$0.25 to C$13.15. Alliance shares were unchanged at C$18. West Fraser was unchanged at C$29.10.
May new home sales are likely to have dropped by 1 percent to 900,000 units at an annual pace, according to the median of 45 forecasts in a Bloomberg News survey.
Even with the slowdown, the projections would put annual sales of new homes second only to the record 907,000 homes sold last year.
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