Stella-Jones expects more demand for railway ties as economy picks up

Treated-wood producer Stella-Jones expects more demand for its railway ties in new tracks and upgrades as the economy improves, The Canadian Press reports. Sales of railway ties at Stella-Jones increased 91 per cent in its third quarter to C$84.3 million, chief executive Brian McManus said.

"These results reflect
what we see as a growing confidence among railroad operators and the gradual strengthening
of the economy," McManus said, after the company reported its
third-quarter profit increased by 54 per cent to C$12.2 million.

The number of carloads and
intermodal containers hauled on North American railroads was up between 10 and
15 per cent in the first nine months of this year, he told analysts on a
conference call to discuss the quarterly results.

"This greater activity
should lead to increased investments in both new track and track
upgrades," McManus said. "Industry demand for railway ties has also
accelerated in recent months and our enhanced market penetration positions
Stella-Jones to benefit from any business opportunity that may arise."

The acquisition of
U.S.-based Tangent Rail Corp., effective last April 1, contributed sales of
approximately C$41.2 million, the Montreal company said. The integration of
Tangent is still a focus for Stella-Jones, McManus said. Stella-Jones bought
Tangent for US$165 million to expand its capabilities within the U.S. railway tie
market and provide it with operations for wood treatment.

Tangent produces treated
wood products, primarily railway ties, with plants in Warrior, Ala.; Terre
Haute and Winslow in Indiana; Alexandria, La. and McAlisterville, Pa.

In its financial results,
Stella-Jones said its earnings per share in the quarter were equal to 77 cents
per share. That compared to a profit of C$8.3 million or 65 cents a share in
the same quarter last year. Overall sales rose to $161.3 million from C$104.7
million.

Looking ahead, McManus said
there’s growing demand for Stella-Jones products.

"In brief, we are
optimistic for the coming quarters."

Stella-Jones produces a
variety of treated-lumber products that also include wood poles for the
electrical utility industry and consumer lumber products.

McManus said consumer
lumber sales were down more than 15 per cent to $9.5 million due to
"unfavorable" Canadian weather and the expiration of the federal home
renovation tax credits.