Ainsworth Lumber Co. reported today that, thanks to a huge gain in foreign exchange rates related to its debt, it swung to a net profit of C$19.5 million (US$18 million at current exchange rates) in the second quarter from a year-earlier C$33.5 million (US$31 million) even though its operations swung to a C$19.1 million (US$17.7 million) loss from a C$900,000 (US$832,500) profit in the April-June 2008 period.
Sales for the Vancouver, B.C.-based company dropped 16.6% to C$81 million ($US74.9 million) from C$97.2 million (US$89.9 million). Lumber prices in the quarter were down 8.1% from a year before, while the volume of lumber that Ainsworth sold declined 1.1%.
Ainsworth calls itself the fourth-largest producer of oriented strand board (OSB) in North America. It serves primarily the western United States, particularly California.
The company credited the difference between operating and net earnings largely to a C$50.4 million (US$46.6 million) gain in foreign exchange compared with a C$6.8 million (US$6.3 million) gain a year before. The Canadian dollar averaged 13% lower in value against the U.S. dollar during the second quarter than it stood a year before, adding C$4.9 million (US$4.5 million) to the bottom line, Ainsworth said.
It reported adjusted EBITDA--a measure Ainsworth uses that takes in net (loss) income from continuing operations before amortization, (gain) loss on disposal of capital assets, finance expense, foreign exchange (gain) loss on long-term debt, other foreign exchange (gain) loss, income tax recovery and non-recurring items--swung to a loss of C$3.5 million (US$3.2 million) from a profit of C$11.6 million (US$10.7 million) in the second quarter of 2008.
Last July, the company was restructured and the Ainsworth family lost effective control of the business it had operated for two generations. Ainsworth has closed permanently two OSB mills in Minnesota and is seeking a new use for a third one in the state. In addition, it has indefinitely closed an OSB facility in Alberta that it jointly owns, and has stopped work on a new line at another plant in Alberta that was designed to produce engineered wood products.
"Until market conditions improve, the Company is committed to focusing its resources on its best performing assets," Ainsworth said in a statement. "Over the near term our priorities will continue to be managing our costs and returning our company to EBITDA positive results. Strategically, Ainsworth is focused on diversifying its business geographically, expanding its value-added product offerings, and leveraging the company's proven track record of operational excellence, innovation and technical product development to become a company that is sustainable and profitable throughout business cycles."