Western Forest Products Inc. (TSX:WEF) reported a 25% decline in sales in an extremely challenging first quarter, which ended on March 31.
Sales for the Duncan-headquartered company fell to $152.6 million from $203.3 million due to depressed prices in most of the company's product markets. First-quarter cedar lumber sales fell 41% compared with results in 2008's first quarter.
Total lumber sales for the company fell 16% to $128.2 million from $152.5 million due to weakening demand and lower prices. Shipments decreased 12% to 166 million board feet and average lumber prices fell 5% to $772 per thousand board feet.
The company reported that lumber markets continue to be weak in most regions. It added that buyers are also reluctant to commit to purchases that involve substantial lead times.
To preserve liquidity and avoid producing in unprofitable markets, Western shut down its logging and manufacturing operations and instead sold product from its inventory. Log production fell 62% and lumber production fell 44% in the first quarter compared with production in the same period in 2008.
As a result, the company's quarterly loss before income taxes and depreciation remained static at $15.9 million compared with 2008's first quarter. Net loss for the quarter rose 15% to $25 million from $21.8 million.
In a letter to shareholders, Dominic Gammiero, Western's president and CEO, said, "We will continue to focus on matching our production levels with demand for our products, thereby controlling our costs. The common view is that the very slow economic activity and construction will continue until the end of this year."
The company said for the remainder of the year, it plans to preserve its liquidity and manage its working capital to the lowest possible level with the expectation that the rest of 2009 and much of 2010 will remain difficult.
Western Forest Product's share price range during the past week: between $0.075 and $0.09; 52-week high: $0.30; 52-week low: $0.045.