Canfor Corp. (TSX:CFP) reported a net loss of $94.2 million ($0.66 per share) for 2008's third quarter after facing major challenges on a number of fronts.
The Vancouver-based company, which is Canada's largest producer of softwood lumber, had reported net second-quarter income of $64.2 million ($0.45 per share).
"These are certainly very challenging times for our industry, with a severe downturn of the U.S. housing market and the current turmoil in global financial and credit markets," Jim Shepard, Canfor's president and CEO said in a Friday conference call with investors and analysts.
But after removing several unusual one-time items that affected comparability with prior periods, Canfor reported an adjusted net loss for the third quarter of $3.5 million compared with similarly adjusted net losses of $20.8 million for the second quarter of 2008 and $45.9 million for the third quarter of 2007.
Shepard said the improvement in adjusted earnings reflected the company's continued progress in reducing its operating overhead in the quarter, despite challenges presented by significant production curtailments and higher transportation costs.
U.S. housing starts, already at historically low levels, fell further in September amid heightened concerns about the U.S. economy.
"Demand has since dried up, and prices have plummeted as a result," said Shepard.
Pulp markets also weakened in the third quarter as a result of falling global demand, putting prices under considerable pressure late in the quarter.
Shepard said Canfor's priorities would continue to be managing its costs and cash position.
Paul Quinn, an analyst with RBC Dominion Securities Inc., said in a research note that Canfor's third-quarter results were above expectation.
Quinn said Canfor's healthy balance sheet gives it sufficient flexibility to endure the "trough conditions" in the U.S. housing market.