Canfor Loss in 4th Quarter

By 250 News

Prince George, B.C. - Canfor has released its fourth quarter results and  the loss  was significant.

The company said it lost C$237 million, in the last three months of 2007 on sales of C$711 million. Its operating loss in the period was C$124.7 million.

That compared with a profit of C$471.8 million, a year earlier, when its results were boosted by the refund of  duties paid  once the Softwood lumber agreement came into play.

In the release , Canfor says  the adjustment for "significant items that affect comparability with prior periods the loss was $69.6 million."  Those significant items include mill closure and severance costs of $14.2 million, partially offset by the benefit of corporate income tax rate reductions of $35.8 million.

For the year 2007, the Company reported a net loss of $360.6 million . After adjustment for significant items that affect comparability with the prior year, the loss was $199.0 million . These items, for the full year, include an asset impairment charge of $199.2 million, and closure and severance costs of $27.3 million, partially offset by the corporate income tax rate reduction of $37.7 million.

Net income in 2006 was $471.8 million ) and included the duty refund of $551.2 million. When adjusted for all other items affecting comparability, there would have been a loss of $99.1 million ($0.69 per share).

Declining lumber and panel prices and the high value of the Canadian dollar continued to erode margins resulting in a higher operating loss compared to the third quarter of 2007. In response to continued poor market conditions, in the fourth quarter the company curtailed production by approximately 255 million board feet of lumber and 10 million square feet of panel production.

In addition, during the quarter the company announced the indefinite closure of its Chetwynd sawmill and the decision to move from three shifts to two for an indefinite period of time at its Rustad, Clear Lake, Polar, Mackenzie and Vavenby sawmills.

The permanent closure of Canfor’s Panel and Fibre operation in New Westminster, B.C. was also announced and is in the process of being completed.

“2007 was a difficult year for our industry” said Canfor President and CEO, James Shepard. “The collapse of the U.S. housing market, record low lumber and panel prices and a strong Canadian dollar in combination made for some of the worst market conditions the forest sector has seen in decades,” he said. “I wish to assure our shareholders that management remains focused on all our controllable costs. Sustainable improvements are being achieved thanks to the committed efforts by all our employees.

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