St Lawrence Cement Group Inc - First Quarter Results

St Lawrence Cement Group Inc - First Quarter Results
Published: 02 May 2007

St. Lawrence Cement Group Inc. (the "Company") reported sales of $151.8 million for the first quarter ended March 31, 2007, compared to $178.1 million for the same period last year, a decrease of 14.8%. The lower sales reflect lower sales volumes of construction materials and lower construction services revenues as a result of unfavourable weather conditions in our markets compared to the first quarter of 2006. The lower sales volumes were partly offset by increased selling prices for construction materials in our Canadian markets and a positive foreign exchange impact of approximately $0.6 million on the translation of U.S. sales into Canadian currency for reporting purposes.


Sales volumes of cementitious materials decreased by approximately 20% compared to the first quarter of last year while volumes for aggregates and ready-mix concrete decreased by 9% and 11%, respectively, compared to the same 2006 period. It should be noted that the sales volumes in the first quarter of 2006 were higher than usual (based on historical first quarter averages), reflecting the exceptionally early start to the construction season as a result of the good weather conditions last year.


Gross profit for the first quarter decreased by $17.1 million to $7.9 million compared to the same period in 2006. This decrease is attributable to lower sales of construction materials, significantly higher costs of cement imported into the U.S., and increases in energy, distribution and maintenance costs which were partly offset by higher selling prices in the Canadian markets as well as research and development tax credits recorded in the period. Price increases for the U.S. markets, originally intended for January 1, 2007, were delayed to April 1, 2007 as a result of market conditions.


Selling and administrative expenses for the first quarter amounted to $22.4 million compared to $23.8 million for the same period last year. The decrease is mainly explained by severance payments included in the 2006 amount as well as lower pension expenses in the quarter compared to the same period last year. Depreciation expenses decreased slightly by $0.2 million compared to the same period last year.


Consequently, the operating loss increased to $27.6 million compared to $12.1 million for the first quarter of 2006.


Other expenses increased by $1.2 million compared to the first quarter of 2006. The 2006 amount included the reversal of certain provisions that were deemed no longer payable by the Company.


Financial expenses for the first quarter amounted to $3.9 million compared to $3.3 million for the same period last year. The increase is mainly due to higher interest rates, which were slightly offset by a $0.5 million reduction as a result of the adoption of new accounting standards relating to financial instruments in 2007, as well as the recognition of a small foreign exchange loss in the period compared to a foreign exchange gain for the same period last year.


Net loss for the quarter was $19.5 million ($0.46 basic loss per share) compared to a net loss of $9.3 million ($0.22 basic loss per share) for the first quarter of 2006. The Company has historically posted a net loss in the first quarter of each fiscal year as a result of the seasonal nature of the construction business in its markets.