Canfor will take $256 million hit
Canadian forest products company Canfor has announced pre-tax write-downs of about $256 million, another sign of the difficulty faced in lumber markets of the Pacific Northwest and Canada.
The Vancouver-based company said the charges included $90 million related to its lumber segment, $141 million related to wood panels and $25 million to corporate and other related segments.
In December, the forest products company opted to close a Chetwynd, B.C.-based sawmill, laying off 188 employees. Canfor attributed the closure to poor lumber markets and the impact of a high Canadian dollar. Additionally, Canfor earlier laid off 300 workers at four sawmills in British Columbia.
Canfor will release fourth-quarter and fiscal 2007 results on Feb. 22.
Griffith: Investigations produce no surprises
Ace Hardware CEO Ray Griffith said the company’s $152 million accounting error is embarrassing, but the completed investigations released to members last week show no missing money, no missing inventory and no fraud. In an interview with HCN, he added that Ace now enters “phase two” of its recovery process.
The investigations from Protiviti, an independent risk consulting company, and legal firm Skadden, Arps, Slate, Meagher & Flom indicate a mid-level employee made the initial accounting mistake, and the co-op’s systems and management team failed to catch the error. The investigations concluded the size of the error was $152 million.
Griffith called the conclusion of the investigations a “significant milestone” that represents progress.
“It is always a relief for any president, CEO, board of directors and stock holders to know that no one took any money, no one stole any inventory and there was no fraud committed by anyone,” Griffith told HCN. “Those are not my words, those are Skaddens, as a result of the investigation.”
While maintaining a positive outlook on the investigations, Griffith pointed to a handful of dealer defections that came at least in part because of the accounting error. Through its district managers in the field, Ace is aware of four retailers that have left the co-op, Griffith said. The company has identified a list of about 50 retailers “upset over the accounting issue” to the point where leaving is a possibility, he said.
With the investigations complete, Griffith told HCN the co-op can now move forward into “phase two” of a three-part recovery plan. Phase two will include training and recruitment of talent. “Phase three” will focus on information technology system changes and the expansion of internal audit functions.
As previously reported, the co-op will turn to members to restore its equity to the $320 million level. The co-op set up variance allocation accounts that will be based on each store’s proportionate share of warehouse dividend pool purchases from 2002 through 2006.
Asked about the tone of various postings on Internet bulletin boards from critical dealers, Griffith pointed to day-to-day feedback from retailers supportive of management.
“I’m not so naive to think we still don’t have challenges,” he said. “We do.”
He said management is anxiously awaiting the restatement of financials from KPMG for the years 2004, 2005 and 2006. He anticipates that report to be completed by the end of February. Year 2007 financial report should come out on or before the end of April, he said.
Weyerhaeuser sells European iLevel division
Weyerhaeuser announced that it has reached an agreement to sell its iLevel European engineered wood products operations to Finland-based Finnforest. The terms of the sale were not disclosed.
Included in the transaction were approximately 30 sales and technical support associates as well as supply commitments for iLevel wood products.
“This sale will allow iLevel to focus on its core North American residential wood products business,” said Carlos Guilherme, vp-sales for Weyerhaeuser’s iLevel wood products business.
Finnforest provides products and services to targeted customer segments, such as building and construction, transport vehicle industry, other industrial customers as well as building material and DIY chains with operations in more than 20 countries. The company is part of the MetsaliittoGroup, one of the largest forest industry groups in the world.