February 8, 2008 / 9:23 PM / 10 years ago

Shermag loss nearly triples on big charges

OTTAWA, Feb 8 (Reuters) - Stung by weak demand and intensified competition, Canadian furniture maker Shermag Inc SMG.TO said on Friday its third-quarter loss nearly tripled and that it would speed up its review of operations to find more costs to cut.

The company, whose stock plunged 28 percent to its lowest point in at least 10 years on Friday, said its results were hurt by a weak U.S. housing market, competition from cheap Asian suppliers and a strong Canadian dollar.

The results came one day after Shermag said that minority shareholder Clarke Inc (CKI.TO) wanted to take the company private. Shermag said it was considering the offer.

The furniture maker said its quarterly net loss rose to C$22.3 million, or C$1.67 a share, from C$7.7 million, or 58 Canadian cents a share, in the year-before period.

The results include a C$16.7 million restructuring charge to shut four manufacturing plants, a C$13.1 million asset writedown and C$3.6 million inventory writedown.

Revenue tumbled 38 percent to C$25.3 million as Canadian sales fell 24 percent and exports dropped by 36 percent.

The Sherbrooke, Quebec-based company said it will have 730 staff after it closes four plants and sheds 320 jobs in February, a plan announced in December.

Shermag stock fell 19.5 Canadian cents to end at 49.5 Canadian cents on the Toronto Stock Exchange on Friday, making it the day’s biggest percentage loser.

$1=$1.00 Canadian Reporting by Susan Taylor; Editing by Peter Galloway

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