Business News
Canfor Corporation Announces First Quarter, 2008 Results
Friday 02. May 2008 - Canfor Corporation (TSX:CFP) today reported a net loss of $85.4 million ($0.60 per share) for the first quarter of 2008, compared to a net loss of $237.0 million ($1.66 per share) for the fourth quarter of 2007 and a net loss of $42.7 million ($0.30 per share) for the first quarter of 2007.
The loss for the first quarter of 2008 included several significant items that affect comparability with prior periods, including a $42.0 million log inventory devaluation, resulting from a new inventory accounting standard, which impacted net earnings by $29.0 million ($0.20 per share), an after-tax foreign exchange translation loss on long-term debt net of investments of $10.1 million ($0.07 per share), and an income tax recovery of $9.1 million ($0.06 per share) resulting from a reduction in British Columbia corporate income tax rates. Earnings for the fourth quarter of 2007 were significantly impacted by an after-tax asset impairment charge of $189.1 million ($1.33 per share).
After adjusting for significant items that affect comparability with prior periods, the Company’s adjusted net loss for the first quarter of 2008 was $60.5 million ($0.42 per share). Comparable adjusted net losses for the fourth and first quarters of 2007 were $69.6 million ($0.49 per share) and $40.7 million ($0.28 per share), respectively.
Results for the first quarter of 2008 reflected the continuation of depressed lumber and panel prices resulting from the ongoing U.S. housing market downturn, the strong Canadian dollar and a 15% export tax on lumber shipments to the U.S. Average SPF lumber prices, measured by 2X4 No.2 & Better, declined a further US$25 per thousand board feet (Mfbm) to US$205 per Mfbm in the quarter, at one point dropping to US$190 per Mfbm. Reflecting the extremely challenging environment, the Company operated at well below capacity at both its lumber and panel operations in the first quarter. Partly offsetting the negative results from the solid wood business was a strong financial performance from the pulp and paper segment, which for the most part reflected improved pulp and paper prices.
Despite the extremely difficult market conditions, the Company continued to make further headway in its efforts to reduce costs during the quarter, reporting both lower log and cash conversion costs compared to the previous quarter. “The progress we are making on cost reduction is encouraging. We continue to be very focused on tightly managing our costs and cash flows as we weather this severe downturn,” said Canfor President and CEO, Jim Shepard.
With little prospect of any meaningful price recovery on the immediate horizon, in early April the Company announced further significant lumber curtailments, equivalent to 600 million board feet on an annualized basis. “This decision is consistent with our determination to ensure that our production matches the changing demand level of our markets,” said Shepard.