May 4, 2010 / 11:36 AM / 8 years ago

UPDATE 2-Stella-Jones Q1 lags estimates on weak demand, pricing

* Q1 EPS C$0.46 vs est C$0.52

* Revenue falls 11 pct

* Expects demand levels to remain same as last yr (Recasts; adds details)

May 4 (Reuters) - Wood utility poles maker Stella-Jones Inc (SJ.TO) reported lower-than-expected quarterly results, hurt by softer pricing and weaker railway tie sales, and said it expects demand levels to remain similar to last year.

In 2009, the company experienced weak demand for its core products, mainly in the second half of the year.

Stella-Jones supplies poles and railroad ties by treating wood it buys from sawmills, and also provides industrial lumber and services for construction and marine applications.

For the first quarter, net income was C$5.8 million, or 46 Canadian cents a share, compared with C$7.7 million, or 61 Canadian cents a share, a year ago.

Revenue for the company fell 11 percent to C$99.4 million, partly hurt by reduced railcar availability due to severe winter in the eastern United States in the beginning of the quarter.

Analysts on average were expecting earnings of 52 Canadian cents a share, on revenue of C$106.8 million, according to Thomson Reuters I/B/E/S.

Railway tie sales, which accounts for 40 percent to 45 percent of the company’s business, fell about 22 percent to C$48.2 million.

Utility pole sales fell 2 percent, while industrial lumber sales declined marginally to C$10.1 million.

Shares of the Quebec-based company, which completed the acquisition of Tangent Rail Corp in April, closed at C$29.40 Monday on the Toronto Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal)

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