The global economic downturn continues to weigh heavily on the financial results of Canada's largest softwood lumber producer.
Vancouver-based Canfor Corp. (TSX:CFP) reported an adjusted net loss for 2009's first quarter of $78.2 million compared with similarly adjusted net losses of $53.3 million for 2008's fourth quarter and $89.5 million for 2008's first quarter.
The latest results took into account one-time items, including a gain of $37.8 million from the sale of the site of Canfor's former panel and fibre operation in New Westminster.
U.S. housing starts, which were already at historically low levels, dropped a further 20% in the first quarter to the lowest level since records began in 1959, the company said.
With orders in short supply, lumber prices receded further in the quarter. Western spruce-pine-fir prices hit a low of US$134 per thousand board feet in January before recovering slightly.
Pulp markets were similarly impacted by weak demand, and prices were under severe pressure through the quarter.
Canfor responded by significantly curtailing its lumber production during the quarter, operating at approximately 60% of capacity. Compared with the last quarter of 2008, lumber production was down by 95 million board feet.
Offshore demand for the company's products decreased substantially in the first quarter, reflecting a decline in Japanese housing starts along with a sharp drop in two-by-four pre-fabricated houses.
The decline in demand from Japan was partially offset by an increase in lumber shipped to China.
"Despite our success in driving controllable costs down in the last year, the effects of the unprecedented challenges presented by the current economic downturn are very evident in our results," said Jim Shepard, Canfor's president and CEO.
Shepard said that he expects conditions to remain very difficult through the rest of the year and into 2010 for all of the company's products and that "a series of further measures" will be taken to conserve cash.
"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," said Shepard. "We are determined to emerge from this downturn in the strongest possible financial position."
Since early March, the company has repaid $176 million of long-term debt. It ended the quarter with cash of $155 million and $446 million of available operating lines of credit.