Canfor Corp. posted a net loss of $58.8-million for the first quarter as it operated at only 60 per cent of capacity, and the loss would have been $37.8-million deeper if not for the sale of its former panel and fibre operation in New Westminster, B.C.
Sales crumbled by almost 25 per cent compared with a year earlier, to $488.2-million from $648.5-million.
"U.S. housing starts, which were already at historically low levels, dropped a further 20 per cent in the first quarter to the lowest level since records began in 1959," Canada's largest softwood lumber producer commented in reporting its results Thursday.
"With orders in short supply, lumber prices receded further in the quarter," noted Canfor, which got no relief from its majority interest of the Canfor Pulp Limited Partnership. "Pulp markets were similarly impacted by very weak demand, and prices were under severe pressure through the quarter."
The company, with 7,000 employees and 2,000 contractors at 32 plants in B.C., Alberta, Quebec, Washington and the Carolinas, said the first-quarter net loss amounted to 41 cents per share, compared with a year-earlier loss of $85.4-million, 60 cents per share.
The $37.8-million after-tax gain on the sale of the property in suburban New Westminster in February was partly offset by a $12.4-million loss on currency and natural gas derivatives. The quarter also included $6.4-million in restructuring, mill closure and severance costs from the indefinitely idled Mackenzie and Chetwynd lumber operations and PolarBoard and Tackama panel operations.
Excluding one-time items, Canfor said it lost $78.2-million, or 55 cents per share, compared with an adjusted loss of $89.5-million, or 63 cents, in the first three months of 2008.
"Despite our success in driving controllable costs down in the last year, the effects of the unprecedented challenges presented by the current economic downturn are very evident in our results," said chief executive officer Jim Shepard.
Mr. Shepard added that he expects "conditions to remain very difficult through the balance of 2009 and into 2010 for all of the company's products," and management is taking further cash-conservation measures.
He did not specify new cost-cutting moves, beyond saying Canfor is "targeting further significant reductions in working capital and operating and overhead cash costs, and will be limiting spending on non-essential capital projects until market conditions improve."
At March 31, Canfor held $155.2-million in cash and equivalents, and had $506.1-million of bank operating lines of credit.