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Canfor: Global economic climate significantly impacts Q4 results

Canfor Corporation reported a net loss of $229.8 million ($1.61 per share) for the fourth quarter of 2008, compared…

Canfor Corporation reported a net loss of $229.8 million ($1.61 per share) for the fourth quarter of 2008, compared to a net loss of $94.2 million ($0.66 per share) for the third quarter of 2008 and a net loss of $237.0 million ($1.66 per share) for the fourth quarter of 2007. For the year ended December 31, 2008, the company’s net loss was $345.2 million ($2.42 per share), compared to a net loss of $360.6 million ($2.53 per share) reported for 2007.
The net loss for the fourth quarter of 2008 included one-time items affecting comparability with prior periods, which had a negative impact on net income of $186.3 million.

The last quarter of 2008 saw a significant deterioration in market conditions for the company’s solid wood and pulp products, as a result of the global economic slowdown and further weakness in the U.S. economy. Pulp prices also fell in the quarter as demand waned and global inventory levels mounted.
Commenting on the fourth quarter’s results, Jim Shepard, Canfor’s president and CEO, says: “Despite the deepening of the global economic downturn and its impact on our bottom line, we’ve taken significant actions to reduce operating costs and maintain the strength of our balance sheet. Over the last 18 months, we’ve reduced our logging and hauling costs, increased productivity despite curtailments, disposed of non-core assets, and enacted salary rollbacks and staff reductions.”

He adds that the company remains focused on realizing further cost reductions and productivity improvements, and lowering working capital. “Clearly, our industry is facing unprecedented challenges at this time, and responsiveness is key. We will continue to ensure that our production matches the demand in the marketplace.”

Shepard says that he fully expects conditions to be even more challenging through 2009 for all of the company’s products, adding that management will remain focused on costs, inventory, and cash conservation.

In response to the slowing demand, Canfor took extended curtailments at all of its lumber operations over the Christmas period, and indefinitely closed its Tackama plywood plant in October. Market-related downtime was also taken at the company’s Taylor pulp mill and at Canfor Pulp Limited Partnership (“CPLP”), in which Canfor holds a 50.2% interest.
In January, the company took a further 29 million board feet of market curtailments and subsequently announced a further curtailment of 83 million board feet to occur in February, in addition to elimination of shifts at two of its sawmills for an indefinite period. Curtailment was also announced in February at the joint venture Peace Valley OSB mill.