Stella-Jones decreased operating income by more than 40% in 4Q2016

Stella-Jones Inc reported 41.6% decrease of operating income amid 4.4% sales decline in 4Q2016 y-o-y. According to the announcement, the company’s sales accounted for CAD 341.7 million, generating operating income of CAD 28.2 million in the period.

For the complete 2016 the company’s revenues accounted CAD 1,838.4 million, generating CAD 233.2 million of operating income.

Brian McManus, President and CEO, commented:

“2016 marked the sixteenth consecutive year of sales and net income growth for Stella-Jones. These results reflect the efficiency of our operations and the benefits of our expansion strategy. Most significantly, they point to the categories.

Based on current market conditions in our main product categories, we expect sales to be weaker in the first half of 2017 when compared to 2016 with an expected year-over-year increase in the second half of the year. Operating margins will be negatively impacted by product mix and softer pricing in certain regions. In the railway tie category, given strong demand in the first half of 2016, we anticipate lower year-over-year demand for 2017, while softer pricing will also reduce revenues. In the utility pole category, demand for regular maintenance projects should gradually return to normal patterns in the second half of 2017, but operating margins are also expected to decrease as a result of the geographical sales mix. As for the residential lumber category, we remain confident to further benefit from solid demand for new construction and outdoor renovation projects in the residential and commercial markets. Our immediate focus will be on the integration of our recent acquisitions as well as taking the necessary steps to adjust production levels, maximize operating efficiencies and minimize costs throughout the organization.”

 

Check other wood business-related companies 4Q2016 schedules for financial and operating results.

Earlier Stella-Jones appointed a new board member.

About Stella-Jones Inc:

The company is a leading producer and marketer of pressure treated wood products. It supplies North America’s railroad operators with railway ties and timbers, and the continent’s electrical utilities and telecommunication companies with utility poles. Stella-Jones also provides residential lumber to retailers and wholesalers for outdoor applications, as well as industrial products for construction and marine applications. The Company’s common shares are listed on the Toronto Stock Exchange.

Source: Woodbizforum