VANCOUVER – West Fraser Timber Co. has reported its second quarter 2017 results, showing an increase in earnings and strong product pricing.
The company’s lumber segment generated operating earnings of $171 million (Q1-17 – $152 million) and adjusted EBITDA of $240 million (Q1-17 – $191 million). Improved product pricing was said to be the primary driver of improved results. Countervailing and antidumping duties commenced this quarter, resulting in an expense of $34 million.
The panels segment generated operating earnings in the quarter of $23 million compared with $12 million in Q1 2017. Improved plywood pricing was offset by costs associated with West Fraser’s WestPine MDF plant restart.
The pulp & paper segment generated operating earnings of $32 million, similar to the results for Q1 2017. Higher pulp prices were offset by higher maintenance costs as our Cariboo pulp mill had a planned maintenance shutdown followed by non-related operational issues. The Hinton pulp mill struggled in the first part of the quarter, however performance improved to targeted levels over the balance of the quarter, according to a West Fraser media release.
The U.S. Department of Commerce’s preliminary review in the softwood lumber case resulted in a West Fraser specific countervailing duty rate of 24.12% effective April 28, 2017 and an antidumping duty rate of 6.76% effective June 30, 2017. The duties resulted in an expense of $34 million for the quarter.
Ted Seraphim, president and CEO, said: “I want to thank all of our employees for their tremendous effort and dedication to operational excellence. We are going into the softwood lumber dispute with a strong balance sheet which will enable us to sustain another round of this long-standing disagreement.” The company’s press release states “the allegations of subsidy and dumping are groundless.”
As of July 20, the company’s operations at 100 Mile House, Williams Lake and Chasm remained suspended due to the wildfire situation in the interior region of B.C.
Commenting on the wildfire situation, Seraphim said, “Our foremost concern is for people’s safety and the safeguarding of our communities. I would like to personally thank our employees who are making extraordinary contributions including fighting fires, helping displaced employees and safeguarding our assets.”
West Fraser is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States.