4 Min Read
* Sales fall 25 percent
* Q1 earnings below Wall Street view
* Says poor U.S housing starts hit Q1 results
* Shares up 3 pct (Recasts, adds background, updates share movement)
By Isheeta Sanghi
BANGALORE, April 30 (Reuters) - Forest products company Canfor Corp CFP.TO posted a narrower first-quarter net loss on Thursday, helped by a one-time gain on a property sale, sending its shares up as much as 6 percent.
Shares of the company rose more than 6 percent and touched a high of C$5.55 before paring some gains.
Canfor, Canada's second-largest producer of softwood lumber, posted a net loss of C$58.8 million, or 41 Canadian cents a share, compared with a loss of C$85.4 million, or 60 Canadian cents a share, in the year-ago period.
After taking account of one-time items, the company posted an adjusted net loss of C$78.2 million, or 55 Canadian cents a share.
Results were helped by a gain of C$37.8 million, or 27 Canadian cents a share, from the sale of property at New Westminster, British Columbia, the company said.
Analysts on average expected a loss of 48 Canadian cents a share, according to Reuters Estimates.
The company, whose results were affected negatively by poor housing markets, posted an operating loss of C$124.2 million on sales of C$488.2 million.
Canfor said demand for softwood lumber was depressed through the quarter as housing starts in the U.S., Canada and Japan remained under significant downward pressure, and added that lumber sales were down 24 percent at C$86.6 million.
The company "significantly" curtailed lumber production during the quarter, operating at about 60 percent of capacity, saying lumber production was down by 95 million board feet from the last quarter of 2008.
Canfor said last week it would idle six of its Canadian sawmills for one week over the next two months, and will implement summer closures at all of its mill operations
"We are 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," Chief Executive Jim Shepard said in a statement.
Shepard said Canfor expects conditions to remain difficult through the rest of 2009 and into 2010 for all of its products.
Canadian lumber exports slipped to $3.2 billion in 2008, down 44 percent from the five-year average as the U.S. housing construction market crumbled amid the recession.
A couple of months ago, U.S. lumber futures prices 2LBc1 hit their lowest level in 23 years, but have since climbed about 35 percent, partly because traders expected the United States to tack a 10 percent duty on some imports of Canadian lumber. [ID:nN09458479]
The duty hike, announced earlier this month, will hurt producers on Canada's East Coast, including AbitibiBowater Inc ABH.N, Domtar Corp (UFS.TO) and Tembec Inc (TMB.TO), Salman Partners analyst Mike Richmond said.
Richmond, who has a "hold" rating on Canfor stock, said the recent increase is actually a "competitive advantage" for Canfor because of its West Coast location.
"The big swing has been the pulp, the weaker contribution from the pulp segment," Richmond added.
Pulp markets were impacted by weak demand and prices were under severe pressure through the quarter, Canfor said.
"The global pulp market deteriorated further during the first quarter of 2009 resulting in lower global demand for pulp and paper products, reduced global shipments, higher producer inventories and continued pressure on prices," Canfor added.
The company's shares, which had slumped 40 percent over the past year, were trading up 3 percent at C$5.33 Thursday afternoon on the Toronto Stock Exchange. (Editing by Mike Miller, Jarshad Kakkrakandy)