TRADING SYMBOL: Toronto Stock Exchange - HWD
LANGLEY, BC, March 1, 2013 /CNW/ - Hardwoods Distribution Inc. ("Hardwoods" or the "Company") today announced that the US Department of Commerce ("Commerce") had issued its preliminary determination regarding countervailing duties against hardwood plywood manufactured in China and imported into the United States.
As previously announced by the Company, on September 27, 2012 an unfair trade petition was filed in the United States seeking the imposition of countervailing duties ("CVD") and antidumping duties ("AD") against Chinese hardwood plywood. The trade petition was brought by a coalition of U.S. plywood manufacturers, alleging that Chinese imports are sold in the United States at prices below cost and are subsidized by the Government of China.
On February 27, 2013 Commerce announced it had completed the preliminary stage of its CVD investigation and determined preliminary duty rates as follows:
- 3 Chinese exporters were selected as mandatory respondents, and were the focus of a detailed investigation by Commerce. Commerce found no subsidies against the mandatory respondents, and accordingly these exporters all received 0% CVD duty rates;
- 15 Chinese exporters that were requested to submit specific information to Commerce were deemed not to have provided a satisfactory response, and those 15 Chinese exporters were assigned a 27.16% CVD duty rate;
- For all remaining Chinese exporters, which comprises several hundred producers/exporters and the majority of Chinese production imported into the United States, Commerce assigned a 22.63% CVD duty rate. Substantially all of Hardwoods current suppliers of Chinese imports come from mills that fall into the 22.63% CVD duty rate category.
Hardwoods sells hardwood plywood, lumber and related sheet goods and specialty wood products to customers in North America. Hardwoods strategy includes selling both imported and domestically produced hardwood plywood to satisfy demand and product preferences from Hardwoods customers. The Company sells more domestically sourced hardwood plywood than imported, and estimates that approximately 14% of its total sales is product imported from China that would be subject to the preliminary CVD. Hardwoods has active supply lines for hardwood plywood both in the US and in international markets other than China. Although markets would be disrupted in the short-term if duty rates ultimately result in the price of Chinese plywood no longer being competitive in the United States, the Company believes that it is well positioned to respond to its' customer needs through other sourcing channels that are not dependent upon Chinese production.
The Company expects that this preliminary CVD duty rate will result in an immediate increase in market selling prices to customers of both imported Chinese and domestically produced hardwood plywood products. Additional market impacts, such as changes in production volumes from hardwood plywood producers both domestically and in China, and short term fluctuations in gross profit margins as product prices are adjusted, may also occur. However, the resulting impact of the preliminary CVD duty on markets and therefore on Hardwoods business cannot be determined at this time.
The CVD rates announced by Commerce represent their preliminary CVD determinations only, and are subject to further investigation and revision. The final determination regarding CVD is expected to be issued by Commerce in October of 2013.
Commerce is also conducting a separate investigation into antidumping duties and no AD duty determination has yet been made. Commerce is expected to announce their preliminary AD duty decision on April 29, 2013, with their final AD duty decision at the same time as the final CVD decision is announced in October of 2013.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
This news release includes forward-looking statements. These involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", "expect", "may", "plan", "will", and similar terms and phrases, including references to assumptions. Such statements may involve, but are not limited to: the Company estimates that approximately 14% of its total sales is product imported from China that would be subject to the preliminary CVD; the Company's belief that it is well positioned to respond to its' customer needs through other sourcing channels that are not dependent upon Chinese production; the Company's expectation that the preliminary CVD announcement will result in an immediate increase in market selling prices to customers of both imported Chinese and domestically produced hardwood plywood products; the Company's perspective that additional market impacts, such as changes in production volumes from hardwood plywood producers both domestically and in China, and short term fluctuations in gross profit margins as product prices are adjusted, may also occur, but that the resulting impact of the preliminary CVD duty on markets and therefore on Hardwoods business cannot be determined at this time; the Company's expectation that Commerce is expected to announce their preliminary AD duty decision on April 29, 2013, and their final CVD and AD duty determinations in October of 2013.
These forward-looking statements reflect current expectations of management regarding future events and operating performance as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: national and local business conditions; political or economic instability in local markets; competition; consumer preferences; spending patterns and demographic trends; legislation or governmental regulation (including trade outcomes that impact upon our business); acquisition and integration risks.
Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, management cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements reflect management's current beliefs and are based on information currently available.
All forward-looking information in this news release is qualified in its entirety by this cautionary statement and, except as may be required by law, the Company undertakes no obligation to revise or update any forward looking information as a result of new information, future events or otherwise after the date hereof.
Hardwoods is one of North America's largest wholesale distributors of hardwood lumber and related sheet good products, operating a network of 31 distribution centres in the US and Canada.
SOURCE: Hardwoods Distribution Inc.
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