Lumber producer Conifex Timber Inc. can thank some favourable accounting for finishing the first quarter of 2020 in the black.
Despite recording a net loss from continuing operations of $8.2 million, its bottom line worked out to a $500,000 profit once such items as interest, taxes, depreciation and amortization, foreign exchange and restructuring were taken into account, according to a report issued last week.
The outcome was also an improvement from a $4-million loss by the same measures for the same quarter last year. The difference was attributed to increased operating earnings and lower selling, general and administrative costs.
"With $12.1 million of cash, a largely debt-free lumber business and predictable cash flows from power generation, Conifex is well positioned to withstand the economic challenges B.C. lumber producers face resulting from the COVID-19 pandemic", Conifex CEO Ken Shields said in the report.
The company began the second quarter by invoking a four-week curtailment at its Mackenzie sawmill, which was subsequently extended another four weeks at the beginning of May in answer to the weakening U.S housing market and coinciding drop in the price of lumber.
The shutdown was not expected to materially affect its power plant operations, the company said in the report. That operation consistently accounts for $8 million in revenue from B.C. Hydro each quarter.
Sales of Conifex-produced lumber added up to $20.6 million, compared to $42.6 million for the same quarter last year when a sawmill in Fort St. James remained operating. It has since been shut down with the timber rights sold to Oregon-based Hampton Affilliates, which is to have a new sawmill up and running in the community within about the next 2 1/2 years.
