Stella-Jones Inc reported 25.3% decrease of operating income amid 5.7% sales decline in 1Q2017 y-o-y. According to the announcement, the company’s sales accounted for CAD 396.9 million, generating operating income of CAD 40.8 million in the period.
Brian McManus, President and CEO, commented:
“As anticipated, results for the first quarter of 2017 reflected both lower sales volume and weaker pricing in the railway tie category. Utility poles showed improved performance, reflecting sales synergies directly related to Stella-Jones’ expansion in the southeastern United States over the past two years.
During the quarter, our new treating facility in Cameron, Wisconsin became fully operational, providing us with additional capacity to service the utility pole market.
Given first-quarter results, we continue to 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. Over the short term, operating margins will remain affected by lower railway tie selling prices and a less favourable geographical sales mix for utility poles. The company is taking the necessary steps to adjust production levels, maximize operating efficiencies and minimize costs throughout the organization. We will also continue to study any expansion opportunity that offers strategic value in our main product categories. This strategy has helped Stella-Jones become a consistent force in its industry, while steadily enhancing shareholder value.”
In 4Q2016 Stella-Jones decreased operating income by more than 40%.
Earlier Stella-Jones acquired substantially all the operating assets employed in the businesses of Bois KMS (GMI) Ltée and Northern Pressure Treated Wood (N.P.T.W.) Ltd.
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.