Tough Q1 for Canfor
Canfor, the Canadian forest products and lumber supplier, reported a net loss of 88.5 million Canadian dollars (US$66 million) for the first quarter 2019.
The Vancouver, British Columbia-based company posted a net income of C$112.2 million (US$83.6 million) in the first quarter last year.
Sales declined nearly 7% to C$1.15 billion (US$857 million) from sales of C$1.23 million (US$916 million) for the quarter.
Results for the first quarter of 2019 included a net duty expense of C$36.3 million (US$27 million), at a combined countervailing duty (CVD) and anti-dumping duty (ADD) rate of 26.24%.
During the quarter, Canfor closed its acquisition of 70% the Vida Group at a price of C$590 million (US$440 million).
Earlier this week Canfor announced that it was curtailing operations at all British Columbia dimension mills effective April 29 due to low lumber prices and the high cost of fiber. The curtailment will reduce Canfor’s production output by approximately 100 million board feet. Canfor has 13 sawmills in Canada, with total annual capacity of approximately 3.8 billion board feet.
Total lumber production for the first quarter, at 1.25 billion board feet, was 11% above the prior quarter, primarily reflecting improved productivity and increased operating hours in the South.
###
Bottom line: Falling lumber prices, combined with tough winter conditions in the U.S. and a sagging housing market, bite into Canfor profits.
From the CEO: “While our BC based lumber business experienced significant challenges due to lower than anticipated market prices and difficult operating conditions, our US South and European operations generated solid financial returns. We look forward to adding a further 200 million board feet to our US South operations during the second quarter with the upcoming close of the Elliott acquisition, which will help offset the escalating log cost and fibre supply issues impacting our BC operations,” said Don Kayne, Canfor president and CEO.
Company info: See the full report from Canfor here.
The Vancouver, British Columbia-based company posted a net income of C$112.2 million (US$83.6 million) in the first quarter last year.
Sales declined nearly 7% to C$1.15 billion (US$857 million) from sales of C$1.23 million (US$916 million) for the quarter.
Results for the first quarter of 2019 included a net duty expense of C$36.3 million (US$27 million), at a combined countervailing duty (CVD) and anti-dumping duty (ADD) rate of 26.24%.
During the quarter, Canfor closed its acquisition of 70% the Vida Group at a price of C$590 million (US$440 million).
Earlier this week Canfor announced that it was curtailing operations at all British Columbia dimension mills effective April 29 due to low lumber prices and the high cost of fiber. The curtailment will reduce Canfor’s production output by approximately 100 million board feet. Canfor has 13 sawmills in Canada, with total annual capacity of approximately 3.8 billion board feet.
Total lumber production for the first quarter, at 1.25 billion board feet, was 11% above the prior quarter, primarily reflecting improved productivity and increased operating hours in the South.
###
Bottom line: Falling lumber prices, combined with tough winter conditions in the U.S. and a sagging housing market, bite into Canfor profits.
From the CEO: “While our BC based lumber business experienced significant challenges due to lower than anticipated market prices and difficult operating conditions, our US South and European operations generated solid financial returns. We look forward to adding a further 200 million board feet to our US South operations during the second quarter with the upcoming close of the Elliott acquisition, which will help offset the escalating log cost and fibre supply issues impacting our BC operations,” said Don Kayne, Canfor president and CEO.
Company info: See the full report from Canfor here.