VANCOUVER, BRITISH COLUMBIA - INTERNATIONAL FOREST PRODUCTS LIMITED ("Interfor" or the "Company") (TSX:IFP.A) reported a net loss of $6.5 million or $0.12 per share in the first quarter of 2012. Included in the Company's results in the quarter was the effect of unrecognized tax assets of $1.8 million or $0.03 per share.
Excluding the tax allowance and other one-time items, Interfor recorded a net loss of $5.2 million or $0.09 per share in the first quarter of 2012 compared to a net loss of $3.7 million or $0.07 per share in the immediately preceding quarter and a net loss of $1.7 million or $0.03 per share in the first quarter of 2011.
Also included in the Company's accounts in the first quarter was a provision for share-based compensation of $1.3 million or $0.02 per share compared to a provision of $0.9 million or $0.02 per share in the immediately preceding quarter.
Key factors impacting the Company's results in the first quarter were lower sales revenue, which fell $2 million or 1% vs the immediately preceding quarter, and higher log costs, particularly on the B.C. Coast.
EBITDA for the quarter (adjusted to exclude one-time items and "other income") was $5.8 million, down $0.9 million versus the fourth quarter of 2011 and down $5.8 million versus the first quarter of 2011.
Lumber production in the first quarter was 323 million board feet, up 29 million board feet or 10 percent compared to the immediately preceding quarter, reflecting increased volumes in each of the Company's operating regions. Sales volume, including wholesale activities, was 320 million board feet, up 2 million board feet compared with the fourth quarter.
In the quarter, SPF 2x4 in the North American market averaged US$266 per mfbm, up US$28 per mfbm versus the fourth quarter, and Hem-Fir studs were $US294 per mfbm, up US$34 per mfbm. Activity levels in China remained strong and sales values improved as the quarter progressed. Japan, however, experienced a modest slowing of activities as winter conditions impacted building activity in that market. Pricing in Japan was adversely affected by a weakening of the Yen/US dollar ratio while the cedar market was firm as mild weather in North America and low inventories throughout the distribution channel helped to support demand.
In the quarter, Interfor generated $8.7 million in cash before changes in working capital were considered. Changes in working capital used was $12.0 million in the quarter mostly due to an increase in accounts receivable which in turn was attributable to high shipments prior to quarter-end. Cash capital spending amounted to $10.9 million, including $4.5 million on the Grand Forks and Castlegar upgrades with construction now underway.
Net debt closed the quarter at $115.1 million or 23 percent of invested capital.
In spite of promising economic news in the U.S. in recent months only modest improvements in the U.S. housing market are expected in 2012. Canadian housing markets are forecast to moderate over the balance of the year.
The economic outlook for China appears less robust in 2012 compared to recent years, with the Chinese government scaling back economic growth targets to 7.5%, although the pace of lumber imports is expected to continue to grow.
Activity levels in Japan are expected to improve as the year progresses as reconstruction in the areas impacted by the March 2011 earthquake and tsunami gets underway.
The Canadian dollar is projected to trade near parity relative to its U.S. counterpart through 2012.
Considerable attention continues to be devoted to the Grand Forks and Castlegar capital projects, with project timelines accelerated to a projected completion in the first quarter, 2013.
Interfor intends to maintain a disciplined approach to managing its business by focusing on those items that will position the Company to deliver above average returns on capital invested in the years ahead.
Interfor is a leading global supplier, with one of the most diverse lines of lumber products in the world. The Company has operations in British Columbia, Washington and Oregon, including two sawmills in the Coastal region of British Columbia, three in the B.C. Interior, two in Washington and two in Oregon. For more information about Interfor, visit our website at www.interfor.com.
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