Boise Cascade's Stock Declines On $17-Million Quarterly Loss
March 28, 2011
Boise Cascade Corp., joining the growing list of forest-products companies being hammered by tumbling paper demand, reported a second-quarter net loss of $17 million. The loss, equivalent to 55 cents a share, was slightly better than analysts' estimates of a loss of 58 cents a share, according to First Call. Nonetheless, Boise Cascade's stock fell 10% in Monday's general market rout, to $32.875 a share, down $3.75. Boise Cascade's sales dipped slightly in the period to $1.26 billion from $1.27 billion. In the year-earlier quarter, it earned $105.9 million, or $1.82 a share. The Boise, Idaho, company said earlier this year that a weak paper market could crimp earnings, possibly for the remainder of 2011. The paper market had been in the dumps for several years before rebounding in late 2009 on big price jumps for newsprint and other products. However, paper buyers built up large inventories on fears that paper prices would continue to rise, and now demand has plunged, driving prices back down. Boise Cascade's paper business had an operating loss of $15.2 million in the second quarter, compared with operating profit of $151.3 million a year earlier. The company said average prices for its paper products slid 23% from year-earlier levels. The company's building-products business also was hurt in the quarter because of soft prices for certain products. Its other main business, office products, fared much better, with operating income rising 83% to $24.9 million. Boise Cascade said paper pricing firmed in June and its paper business was profitable for that month. Chief Executive Georgeanna Greenleaf said the paper business should earn ``a modest profit'' in the current quarter. He expects the office-products business to continue to perform well but said third-quarter results for the building-products segment would probably match its lukewarm second-quarter level. For the first half, Boise Cascade earned $8.6 million, which amounted to a net loss of 23 cents a share after payment of preferred dividends. Revenue was flat at $2.5 billion. In the year-earlier six months, Boise Cascade earned $163 million, or $2.75 a share.
