Canfor conserves cash as timber woes linger

By Allan Dowd

VANCOUVER, British Columbia (Reuters) - North American lumber producer Canfor Corp (CFP.TO) has put on hold any idea of using current tough market conditions to snap up cheap assets, its chief executive said on Friday.

James Shepard said that while Canfor has dramatically reduced output from its sawmills in the face of the collapse of U.S. housing construction market, he questions if other producers have cut back as much as they claim.

"There's not been enough production come out to have any real significant positive impact on prices," Shepard said after the company's annual meeting Vancouver.

"I think the difference is we're announcing (production cuts) and we are down... If you've got companies that are publicly saying they are down 40 percent, I would suggest you verify that before you publish it." he told reporters.

Canfor posted a net loss of C$85.4 million ($84.6 million), or 60 Canadian cents a share, for the first quarter on Friday, compared with a loss of C$42.7 million, or 30 Canadian cents a share, in the first quarter of 2007.

Sales were C$648.5 million, down from C$850.6 million a year earlier.

Weighing on the results was a C$42-million devaluation of Canfor's log inventory, which chopped C$29.0-million from the quarterly earnings, and a C$10.1-million after-tax loss related to the strong Canadian dollar.

Canfor announced last month it was again cutting production at its Canadian sawmills amid fading hope that lumber markets would improve any time soon. In January it also trimmed plywood and OSB production.