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Feb. 22, 2017 - Conifex Timber Inc. has reported that adjusted EBITDA in the fourth quarter of 2016 increased to a record $9.3 million from $8.5 million in the previous quarter and $7.3 million in the same quarter of 2015. In 2016, adjusted EBITDA was a record $33.6 million, compared to $7.7 million in 2015. In the fourth quarter of 2016, we had net income of $5.1 million, or $0.24 per diluted share, compared to net income of $1.4 million or $0.07 per diluted share in the previous quarter, and a net loss of $0.3 million or $0.01 per share in the fourth quarter of 2015. Current quarter operating and net income included proceeds from the settlement of our business interruption insurance claim of $2.5 million. In 2016, our net income was a record $70.2 million, or $3.32 per diluted share, compared to a net loss of $17.3 million, or $0.82 per share, in 2015. Net income in 2016 included unusual or non-recurring items totaling $63.8 million. 

Fourth Quarter 2016

Overview

Revenues were $102.0 million in the fourth quarter of 2016, $104.1 million in the previous quarter and $100.5 million in the fourth quarter of 2015. Compared to the previous quarter, a decline in lumber segment revenues of 5 per cent was partially offset by increased revenues from electricity sales, which accounted for 7 per cent of total revenues for the quarter.

We recorded operating earnings of $6.7 million in the fourth quarter of 2016 compared to $3.3 million in the previous quarter and $1.6 million in the same quarter last year. Compared to the previous quarter, lumber segment operating results were adversely impacted by lower shipment and production volumes and higher unit log costs and cash conversion costs. Bioenergy segment operating earnings increased by $5.7 million and included income from the settlement of our business interruption insurance claim of $2.5 million.

Net income for the current quarter was $5.1 million or $0.24 per diluted share. We recorded net income of $1.4 million or $0.07 per diluted share in the previous quarter and a net loss of $0.3 million or $0.01 per share in the fourth quarter of 2015. 

Adjusted EBITDA was $9.3 million for the fourth quarter of 2016, $8.5 million in the previous quarter and $7.3 million for the fourth quarter of 2015.

Lumber Segment

Compared to the previous quarter, a modest decline in U.S. dollar-denominated WSPF #2 and Btr prices was more than offset by a weaker Canadian currency and resulted in a 1 per cent or $3 per thousand board feet increase in average Canadian dollar-denominated benchmark lumber prices.

Quarter-over-quarter revenues from Conifex produced lumber were 3 per cent lower and largely reflected a reduction in shipment volumes of 6 per cent offset by a 3 per cent increase in unit sales realizations. Although wholesale lumber shipments increased by 4 per cent, wholesale lumber revenues declined by 6 per cent due to shipments of a lower value product mix.

Production volumes of approximately 119 million board feet during the fourth quarter of 2016 were 13 per cent lower than the previous quarter. The lower operating rates were mainly attributable to a reduction in operating hours during the holiday season and additional planned downtime taken at the Mackenzie sawmill for capital upgrades. 

An increase in unit log costs of 7 per cent during the current quarter was primarily attributable to higher market based stumpage and purchased log costs.

An increase in unit cash conversion costs of 12 per cent in the current quarter largely reflected lower operating rates. 

Compared to the fourth quarter of 2015, U.S. dollar-denominated WSPF #2 and Btr prices increased by 20 per cent, while the Canadian currency was relatively flat. Average Canadian dollar-denominated benchmark lumber prices increased by 19 per cent, or $68 per thousand board feet.

Quarter-over-quarter revenues from Conifex produced lumber were 5 per cent higher, and mostly reflected a 17 per cent increase in unit sales realizations, partially offset by an 11 per cent reduction in shipment volumes. An increase in wholesale lumber revenues of 3 per cent was generally attributable to higher shipment volumes.

Due to our fiscal accounting periods, there were five less operating days in the fourth quarter of 2016 than in the fourth quarter of 2015. Operating rates in the current quarter were lower by 9 per cent as production was further hampered by downtime taken at the Mackenzie sawmill for capital upgrades and, to a lesser extent, weather related production inefficiencies. 

Unit log costs increased by 11 per cent and cash conversion costs increased by 9 per cent quarter over quarter.

Lumber segment operating income was $2.9 million in the fourth quarter of 2016 compared to $5.6 million in the previous quarter and $0.5 million in the same quarter last year. 

Bioenergy Segment

Our power generation plant at Mackenzie, B.C. (the "Mackenzie Plant") commenced commercial operations in May 2015 and its results are reported in our bioenergy segment.

The Mackenzie Plant sold 53.0 GWh of electricity under the EPA in the fourth quarter of 2016, which represented an increase of 41 per cent over the previous quarter and a modest decline from the fourth quarter of 2015. The plant achieved 97 per cent of targeted operating rates in the current quarter compared to 70 per cent and 98 per cent, respectively, in the previous quarter and the fourth quarter of 2015. Production in the third quarter of 2016 was hampered by maintenance downtime taken to effect certain operating improvements. The fourth quarter of 2016 had five fewer operating days than the same quarter last year. 

The effective power rate is the highest during the first and fourth quarters of each year. Revenues from electricity sales were $7.6 million in the fourth quarter of 2016, $4.9 million in the previous quarter and $7.8 million in the fourth quarter of 2015. Operating costs in the fourth quarter of 2016 were $4.9 million, including depreciation expense of $1.6 million. Unit cash operating costs improved by approximately 8 per cent compared to the same quarter last year.

Normalized bioenergy segment operating income was $2.7 million in the fourth quarter of 2016 and $2.4 million in the fourth quarter of 2015. Interest on the power project term loan was $1.2 million. Adjusted EBITDA was $4.4 million and the adjusted EBITDA margin was 57 per cent, compared to $4.1 million and 52 per cent, respectively, in the fourth quarter of 2015. 

Year Ended December 31, 2016

Revenues were $409.3 million in 2016 compared to $353.5 million in 2015. The 14 per cent growth in lumber segment revenues reflected increased shipment volumes of Conifex produced and wholesale lumber, stronger benchmark lumber prices and a weaker Canadian currency. Bioenergy segment revenues, which commenced in May 2015, increased by 55 per cent and accounted for 6 per cent of our total revenues for the year.

We recorded operating income of $18.2 million in 2016 compared to an operating loss of $11.6 million in 2015. An improvement in year-over-year lumber segment operating results of $23.8 million was primarily due to higher sales realizations, operating rates and shipment volumes, and to a lesser extent, reductions in unit log costs and cash conversion costs. Bioenergy segment operating earnings were $9.0 million in 2016 and included income from settlement of our business interruption insurance claim of $2.5 million. The bioenergy segment contributed operating earnings of $2.1 million last year.

Net income for the year ended December 31, 2016 was a record $70.2 million or $3.32 per diluted share compared to a net loss of $17.3 million or $0.82 per share for the prior year. Unusual or non-recurring items recorded in the current year totaled $63.8 million and were comprised of a gain on sale of assets of $48.0 million, a net gain on revaluation of certain assets of $13.3 million, and income from settlement of our business interruption insurance claim of $2.5 million. Net income was adversely impacted by a negative variance in foreign exchange translation loss of $3.8 million. 

There was no income tax expense recorded in 2016 due to the utilization of operating loss carry forwards from prior years.

Adjusted EBITDA, which excludes the unusual or non-recurring items, was $33.6 million for 2016 and $7.7 million in 2015.

Liquidity and Capital Resources

In addition to our continued focus on operational improvements and targeted capital expenditures, we completed a number of initiatives in 2016 to strengthen our balance sheet, lower borrowing costs and improve liquidity. 

Our net debt to capitalization ratio was 38 per cent at December 31, 2016 compared to 60 per cent at the end of 2015. Net debt at December 31, 2016 was $49.4 million lower than at December 31, 2015 due primarily to improved cash flow generated from operations and proceeds received from asset disposals and the settlement of our insurance claim. 

Our net debt to capitalization ratio, excluding borrowings for our power subsidiary that are non-recourse to our other operations, was 16 per cent at December 31, 2016 compared to 26 per cent at December 31, 2015.

Total liquidity comprised unrestricted cash and available credit under our revolving credit facilities. At December 31, 2016, we had total liquidity of $22.3 million, compared to $22.6 million at the end of 2015. 

Subsequent to the year end, in January 2017, we completed our previously announced $130 million secured revolving credit facility (the "Facility") with a syndicate of institutional lenders. The Facility is available for a term of 5 years and is secured by substantially all of Conifex's assets (excluding the bioenergy segment assets). After giving effect to the financing, our total liquidity was approximately $84.5 million. 

Market Outlook 

Looking ahead in 2017, we expect the U.S. market to continue its gradual recovery in both the housing and repair and remodelling sectors. We agree with forecasts calling for an approximate 7 per cent increase in North American lumber consumption, and expect benchmark prices to increase to reflect strengthening softwood lumber demand and to somewhat correlate with the imposition of any countervailing and / or anti-dumping duties or other trade sanctions. The extent to which the anticipated increase in U.S. housing demand translates into higher selling prices will also be influenced by supply side responses from Canadian and other suppliers into the U.S. market. The uncertainty related to the timing and magnitude of anticipated trade sanctions may increase market volatility. 

We expect our sales volume to China and Japan will remain steady and intend to continue to develop sales into other export markets.

In the lumber segment, we continue to remain focused on a number of initiatives to enhance operations and cash flow, including cost management and productivity improvements from affordable, high-return capital projects. We expect operating rates to remain somewhat muted in the first quarter of 2017 due to the expected ramp up period associated with the installation of a significant capital upgrade at Mackenzie in December 2016. Accordingly, we also expect shipment volumes to be somewhat hampered by lower production volumes and potential constraints on the external supply chain. Overall in 2017, we expect higher log costs and modest improvements in unit cash conversion costs and grade outturns. 

We will continue to work towards optimizing performance of the Mackenzie Plant and expect improved operating results from higher electricity deliveries and further unit cost reductions.
Feb. 22, 2017 - Acadian Timber Corp. has reported financial and operating results for the year ended Dec. 31, 2016.

Acadian maintained its momentum and posted another year of strong results, generating Free Cash Flow of $19.4 million resulting in a payout ratio of 86 per cent, comfortably below our target level of 95 per cent. 

"Acadian posted another year of strong performance and we believe we are well positioned to maintain this momentum in 2017. Our operations continue to perform very well in the current market environment and we maintain a strong balance sheet," commented Mark Bishop, chief executive officer of Acadian. "We have a positive outlook for the coming year, and we are pleased to announce that our Board of Directors has approved a 10 per cent increase in Acadian's annual dividend."

Adjusted EBITDA for the year was $22.5 million. Although Adjusted EBITDA was down year-over-year, our operations continued to benefit from steady demand and strong pricing in New Brunswick. The decline was primarily due to relatively weak softwood pulpwood markets in Maine and a reduction in New Brunswick hardwood harvest levels consistent with our long term forest management plan.

For 2016, we paid a dividend to shareholders of $1.00 per share or 8 per cent of Free Cash Flow, which is below our long-term target of 95 per cent. Based on our expectation of continued strong performance and supported by our strong liquidity, Acadian's Board of Directors approved a 10 per cent increase in Acadian's annual dividend to $1.10 per share effective in the first quarter of 2017.

Acadian generated net sales of $77 million in the year ended Dec. 31, 2016, a decrease of $7 million compared to the prior year. We saw continued strength in pricing for most of our non-biomass product with the exception of softwood pulp, driving a 1 per cent increase in the weighted average log selling price year-over-year, led by an ~5 per cent increase in our average realized price for hardwood products. However, strength in log selling prices in the New Brunswick market was more than offset by a 9 per cent decrease in log sales volumes due primarily to our planned reduction in hardwood harvest levels under Acadian's forest management plan. In addition, the harvest of certain softwood species was impacted by less favourable year-over-year operability.

Adjusted EBITDA for the year was $22.5 million, compared to $26.4 million in 2015, driven primarily by the above noted decrease in net sales. Adjusted EBITDA margin of 29 per cent for 2016 was slightly below 2015 levels, as longer average haul distances combined with a lower margin sales mix offset the above noted increase in average realized log selling price.

Net income for the year totaled $16.1 million, or $0.96 per share, compared to $13.6 million, or $0.82 per share in 2015. The increase is primarily a result of a significant unrealized foreign exchange loss on long term debt which impacted the year ended December 31, 2015.

New Brunswick Timberlands

Net sales for the year totaled $56.5 million compared to $60.7 million in 2015. This decrease reflects a 2 per cent increase in the weighted average log selling price, offset by a 9 per cent decrease in log sales volumes. Log sales volumes declined in 2016 to 721 thousand m3 from 791 thousand m3 in 2015, due primarily to a planned reduction in hardwood harvest volumes under Acadian's new forest management plan. In addition, volumes were impacted by less favourable harvest conditions for pine and cedar stands. The weighted average log selling price was $67.03 per m3 in 2016, up from $65.49 per m3 in 2015, due primarily to more favourable pricing for hardwood products.

Adjusted EBITDA for the year was $19.3 million, compared to $20.3 million in 2015, due primarily to the aforementioned decrease in log sales volumes. Costs were $37.2 million, compared to $40.4 million in 2015, due to lower log sales volumes and flat variable costs per m3. Adjusted EBITDA margin increased to 34 per cent in 2016 from 33 per cent in 2015, driven by an increase in the weighted average log selling price while variable costs remained flat.

Maine Timberlands

Net sales for the year totaled $20.6 million compared to $23.8 million in 2015, with the decline resulting from an 11 per cent decrease in log sales volumes. This decrease is due primarily to a 12 per cent decline in softwood sales volume as local markets have been challenged by weak demand for softwood residuals. The weighted average log selling price in Canadian dollar terms was $78.61 per m3 in 2016, a decrease from $80.70 per m3 in 2015. In U.S. dollar terms, the weighted average log selling price was $58.84 per m3, a decrease of 7 per cent year-over-year, due primarily to continued weakness in softwood pulp pricing.

Adjusted EBITDA for the year was $4.3 million, compared to $7.6 million in 2015, due primarily to the aforementioned decrease in sales volumes. Costs for the year were $16.3 million, compared to $16.2 million in 2015, due primarily to higher variable cost per m3, resulting from greater hauling distances for hardwood products and an unfavourable sales mix. Variable costs per m3 increased 11 per cent in Canadian dollar terms and 6 per cent in U.S. dollar terms, respectively, year-over-year. Adjusted EBITDA margin decreased to 21 per cent this year, from 32 per cent in 2015, due to the above noted decrease in log pricing and increase in variable costs per m3.

Market Outlook

The U.S. economy appears to have started the new year with strong momentum on the basis of robust job growth and rising wages. Housing starts would appear positioned for continued growth owing to a combination of improving employment opportunities, and the release of pent-up demand. However, shortages of skilled labour and finished lot availability remain as potential constraints. Further, potential successive rate increases and a more protectionist U.S. trade stance both remain as downside risks to housing affordability. Nevertheless, current consensus expectations still call for healthy year-over-year improvements in total housing starts for each of 2017 and 2018 of about 6-7 per cent. Industry forecasters predict that North American sawtimber demand will grow at over 3 per cent per year over the next few years to support expanding domestic construction needs.

Despite the expectation for steadily improving U.S. lumber consumption, the lumber pricing environment for 2017 remains uncertain following the recent U.S. ITC injury determination which is widely expected to result in preliminary application of countervailing duties in late spring and anti-dumping duties by early summer. As in past disputes, we would anticipate relatively high initial duties, which will be reduced over time during the litigation period. However, we anticipate a highly politicized process may obscure visibility on progress towards a negotiated settlement for at least most of 2017. During the prior U.S./Canada softwood lumber dispute, Canada's Atlantic lumber producers and Québec border mills experienced lower relative duties than the rest of Canada and we continue to believe treatment of these producers during the current dispute should be materially the same as in the past. This differential treatment is due to the significantly greater proportion of private timberlands in the Atlantic region relative to the rest of Canada as well as a long history of active cross-border log exports within the Northeast region.

Acadian's key markets include softwood sawtimber, hardwood sawtimber and hardwood pulpwood. While we anticipate softwood sawtimber markets will remain well balanced through the year, greater volatility in this market should be expected as the softwood dispute plays out. While continued oversupply of softwood sawmill residuals and softwood pulpwood markets remains a concern, we anticipate regional timberland owners will aggressively manage pulpwood harvest levels through 2017. Hardwood sawtimber markets, typically oriented to millwork and higher value specialty markets are expected to remain at healthy current levels through the upcoming year. Hardwood pulpwood, increasingly consumed by tissue and other non-publishing paper end uses, also remains in good balance, but historically very strong prices may be somewhat vulnerable in a strengthening U.S. dollar environment. Biomass is also an important market for Acadian. We anticipate domestic biomass markets to remain stable in New Brunswick and anticipate improved potential for a gradual recovery of export volumes through the year. Maine's biomass market appears positioned for at least a modest recovery following a challenging 2016, as state subsidies have now permitted three previously idled biomass generation facilities to restart. Additionally, potential for sustained higher natural gas prices may be a catalyst for a shift back to biomass consumption for regional cogeneration capacity.

Quarterly Dividend

Acadian is pleased to announce a dividend of $0.275 per share, payable on April 14, 2017 to shareholders of record on March 31, 2017.



Acadian Timber Corp. is a leading supplier of primary forest products in Eastern Canada and the Northeastern U.S. With a total of 2.4 million acres of land under management, Acadian is the third largest timberland operator in New Brunswick and Maine.
Feb. 22, 2017 - The U.S. lumber markets are already seeing some major price volatility, where W-SPF lumber prices soared by a whopping 25 per cent (US$78/Mbf) in the three-week period between Jan. 27 and Feb. 17, 2017 and up US$83/Mbf over the previous five-week period.

This three-week price increase in U.S. lumber prices is one of the largest short-term gains over the past 20 years. This is mirroring a similar scenario back in early 2001 when countervailing duties (CVD) on Canadian lumber shipments into the U.S. moved into their 90-day retroactive period in mid-May 2001 and the anti-dumping duties (ADD) followed later. The initial combined duties of 32.3 per cent were both in effect in November 2001.

The largest U.S. lumber price spike ever, based on price changes in consecutive weeks, was in 2001 – before the implementation of the last U.S. duties – when lumber prices spiked higher by US$165/Mbf over a 7-week period. This was followed by two major price collapses over the next six months: one over five weeks for a drop of US$111/Mbf; and a second over 9 weeks for US$122/Mbf (details are provided in this month’s WOOD Markets Monthly Report). Understanding the possible scenarios and implications of U.S. export duties on Canadian lumber shipments to the U.S., before and after duties are implemented, are critical factors to consider and understand for all players throughout the lumber supply chain.
Feb. 17, 2017 - West Fraser reported earnings of $79 million or $1.01 basic earnings per share on sales of $1,107 million in the fourth quarter of 2016 and earnings of $326 million or $4.06 basic earnings per share on sales of $4,450 million for 2016. These results compare with previous periods.

Adjusted EBITDA, Adjusted earnings and Adjusted basic EPS as described in this News Release reflect the adjustments described in the tables referred to in the section titled "Non‑IFRS Measures" of our 2016 Management's Discussion & Analysis.

Operational Results

In the quarter our lumber operations generated operating earnings of $107 million (Q3-16 –$114 million) and Adjusted EBITDA of $144 million (Q3-16 - $151 million).  Production and shipments declined quarter over quarter due to cold weather in several of our operating areas and fewer operating days. The segment's results benefited from a weaker Canadian dollar while Canadian log costs continued to rise.

Our panels segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $17 million (Q3-16 - $30 million) and Adjusted EBITDA of $20 million (Q3-16 - $33 million). The major contributor to the decline was plywood pricing as winter weather slowed Canadian construction.

Our pulp & paper segment generated operating earnings of $20 million (Q3-16 – $22 million) and Adjusted EBITDA of $30 million (Q3-16 - $31 million). NBSK operations were able to offset additional costs associated with cold weather with higher shipments while BCTMP price improvements offset reduced shipments caused by port congestion.

Outlook

Our president and CEO Ted Seraphim said: "During 2016 we faced a number of challenges and, although we still have important work to do, I have been greatly encouraged by the progress that we have made across the Company in achieving operational excellence. This will continue to be our focus in the coming years as it is the critical component of our business over which we have control. I'm grateful to our many employees whose commitment to this standard of excellence is evident in their daily activities."

Mr. Seraphim also commented on the current softwood lumber dispute: "In light of the operational progress that we are making as a company, it is particularly disappointing that we find ourselves once again caught up in another dispute with our American neighbours over softwood lumber exports from Canada to the U.S. West Fraser has worked hard to contribute to a resolution of this long‑standing dispute, as have various levels of government in Canada and other Canadian industry participants. West Fraser was recently selected by the U.S. Department of Commerce as a mandatory respondent in separate subsidy and dumping investigations which has imposed substantial time commitments and costs on us. Despite this we continue to support a negotiated settlement that will manage trade in a fair and reasonable manner but, as always, we would prefer no agreement to a bad agreement."
Feb. 16, 2017 - Housing starts returned to trend, dropping 2.6 per cent to a seasonally adjusted annual rate of 1.246 million units, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Multifamily production fell 10.2 per cent to 423,000 units after an unusually high December 2016 reading, whereas single-family starts ticked up 1.9 per cent to 823,000 units.

"A settling of housing production is in line with what we are hearing from builders -- that they are largely optimistic about current market conditions but still face supply-side headwinds and regulatory hurdles," said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas.

"Some pull back in housing production is unsurprising after an overly strong multifamily reading last month," said NAHB Chief Economist Robert Dietz. "As we move forward in 2017, we can expect the multifamily sector to continue to stabilize and single-family production to move forward at a gradual but consistent pace."

Regionally in January, combined single- and multifamily housing production rose 55.4 per cent in the Northeast and 20 per cent in the South. Starts fell by 17.9 per cent in the Midwest and 41.3 per cent in the West.

Overall permit issuance rose 4.6 per cent in January to 1.285 million units. Single-family permits fell 2.7 per cent to 808,000 units. Meanwhile, multifamily permits increased 19.8 per cent to 477,000 units.

Regionally, permits rose 29.6 per cent in the Northeast, 9.9 per cent in the South and 5.3 per cent in the Midwest. The West registered a decline of 13.2 per cent.
Feb. 15, 2017 - Brazil’s pulp sector has for over two decades had some of the lowest wood fibre costs in the world, making the industry highly competitive, reports the Wood Resource Quarterly. The low production costs have resulted in major investments in pulp production capacity with a majority of the pulp being exported overseas, predominantly to China.

The export market for pulp produced in Brazil has become increasingly important for the pulp sector with the export share of domestic production having gone up from 55 per cent in 2007 to almost 70 per cent in 2016. Pulp export volumes have expanded in an impressive fashion over the past two decades, with increased year-over-year shipments for 19 of the past 20 years. This trend continued in 2016, with export volumes likely to reach almost 13 million tons, an increase of about 11 per cent from 2015, reports the Wood Resource Quarterly.

Not surprisingly, China’s steady increase in demand for pulp the past decade has been the key driver to Brazil’s pulp export success story. Over one-third of Brazil’s exports were destined for China this year, up from 23 per cent five years ago.

Brazil has become the second largest producer of wood-based pulp in the world behind the US, having surpassed Canada in 2016. The driving factors have been a combination of low wood fibre costs, a dramatically weakening Brazilian Real, and a steady increase in demand in particular for hardwood market pulp in China.

Over the past three years, wood fibre costs in Brazil have been approximately 60per cent of the manufacturing costs, according to Fisher International. The high cost share for wood fibre, together with being one the lowest-cost pulpwood regions of the world, has made Brazil’s pulp industry a very competitive pulp producer for many of the past 25 years.

In US dollar terms, Eucalyptus pulplog prices have fallen from a record-high in the 3Q/11 to a 12-year low in the 4Q/15. Since the end of 2015, wood fibre prices have gone up but are still substantially below their ten-year average, as reported by the WRQ (www.woodprices.com).

The past two decades have not only been mostly good news for the pulp industry in Brazil, but also for timberland owners measuring their financial results in the Brazilian Real (BRL). In 2016, eucalyptus pulplog prices reached their highest level on record since WRQ started tracking pulplog prices in Brazil over 20 years ago. Current prices are about five per cent higher than one year ago in the local currency, and 23per cent above the average price two years ago.



Global lumber, sawlog, and pulpwood market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, wood chip, lumber and pellet prices, trade, and market developments in most key regions around the world. To subscribe to the WRQ, please go to www.woodprices.com
Feb. 15, 2017 - Canfor Pulp Products Inc. (CPPI) has reported a net income of $10.1 million, or $0.15 per share, for the fourth quarter of 2016, compared to $22.4 million, or $0.34 per share, for the third quarter of 2016 and $29.7 million, or $0.43 per share, for the fourth quarter of 2015. For the year ended December 31, 2016, the Company's net income was $57.8 million, or $0.86 per share, compared to $106.6 million, or $1.52 per share, for 2015.

The company had no items affecting comparability in the fourth quarter of 2016 or for the year ended Dec. 31, 2016. Adjusted net income was $29.0 million, or $0.42 per share, for the fourth quarter of 2015, and $111.8 million, or $1.59 per share, for 2015. 
The company reported operating income of $22.9 million for the fourth quarter of 2016, a decrease of $8.1 million from $31.0 million reported for the third quarter of 2016. The decrease in operating income was largely attributable to adverse weather conditions, which impacted both shipment logistics and operations through the period. Sales realizations for Northern Bleached Softwood Kraft (NBSK) pulp were largely unchanged quarter-over-quarter, while Bleached Chemi-Thermo Mechanical Pulp (BCTMP) sales realizations saw a marked improvement. The company's net income for the fourth quarter of 2016 included the pre-tax write-down of $7.0 million of advances made in connection with the biofuels technology initiative with Licella Fibre Fuels Pty. Ltd. (Licella), a subsidiary of Ignite Energy Resources Ltd. Notwithstanding the future benefits that may result from this innovative effort, the write-down reflected the research and development nature of the advances.

Global softwood pulp markets were relatively stable through most of the fourth quarter of 2016 as evidenced by the average China US-dollar NBSK pulp list price, as published by RISI, remaining at US$595 per tonne. NBSK pulp unit sales realizations were broadly in line with the third quarter of 2016, as a slightly weaker Canadian dollar was offset by increased pricing pressure in North America. BCTMP unit sales realizations increased significantly, reflecting the continued improvement in BCTMP markets. Energy revenues moderately increased during the current quarter, for the most part, reflecting increased power generation and seasonally higher energy prices.

Pulp shipments were down 14 per cent from the previous quarter principally reflecting weather-related impacts on shipments, including a delayed vessel shipment over the year end. Pulp production was 3 per cent lower than the previous quarter, primarily due to the severe weather conditions, which more than offset the impacts of scheduled maintenance outages in the previous quarter. Pulp unit manufacturing costs were up slightly from the previous quarter, reflecting higher energy usage combined with seasonally higher energy costs, as well as the unfavourable per unit impact of lower production volumes.

Operating income in the company's paper segment at $8.1 million for the fourth quarter of 2016 was up $0.9 million from the third quarter of 2016, largely reflecting slightly higher paper unit sales realizations in the current quarter, principally due to a 2 per cent weaker Canadian dollar and lower manufacturing unit costs resulting from higher production volumes during the current quarter.

Commenting on the 2016 year, CPPI's chief executive officer, Don Kayne, said, "The company delivered another solid year in 2016, maintaining steady operational performance and a strong balance sheet, despite market pressures and weather challenges in the fourth quarter".

For the month of January 2017, the company announced an increase of US$20 per tonne for NBSK pulp list price to China, equating to US$630 per tonne, and an increase of US$10 per tonne for BCTMP. For the month of February 2017, the company announced a further US$20 per tonne increase to both its NBSK pulp and BCTMP list prices to China. Global softwood markets are currently seeing positive pricing momentum, for both NBSK pulp and BCTMP, and this is anticipated to continue into the second quarter of 2017.

On Feb. 8, 2017, the Board of Directors declared a quarterly dividend of $0.0625 per share, payable on Feb. 28, 2017 to the shareholders of record on Feb. 21, 2017.
Feb. 13, 2017 - Declining demand and prices for softwood lumber, together with reduced log trade have resulted in lower sawlog prices in Europe over the past two years with the ESPI sawlog prices index reaching its lowest point since 2010, according to the Wood Resource Quarterly.

Over the past two years, sawlog prices have fallen more in Europe than in any other region of the world. In the 3Q/16, the European Sawlog Price Index (ESPI-) was down a modest 0.5 per cent from the previous quarter to 83.40/m3. The Index has trended downward for the past few years and in 2016 has been at its lowest level since 2010. Much of the recent decline has been the result of reduced demand for lumber in some markets and generally lower lumber prices in both domestic and export markets.

Although the ESPI-Index has been in a declining mode since early 2014, the current price index is still 10 per cent higher than the average for the period 1999-2016.

During the past two years, sawlog prices (in Euro terms), have fallen the most in Finland, Norway, Poland, Austria and Estonia, all countries that are major exporters of softwood logs or lumber.

The slowing demand for lumber in Europe has also resulted in a decline in log trade on the continent. WRI estimates that total trade of softwood logs will be down about 12 per cent in 2016 as compared to the previous year and that shipments will be at their lowest level since the global financial crisis in 2008 and 2009. Some of the biggest declines in trade this year has been in exports from Norway, France, Ukraine and Latvia.

Note: The ESPI price index is a volume-weighted index comprising of sawlog prices for log grades commonly used for manufacturing lumber into construction and better grades lumber in the largest log-consuming countries in Europe. The Index tracks prices from the 1Q/95 to the current quarter and is published each quarter in the WRQ.



Global lumber, sawlog and pulpwood market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, lumber and pellet prices, trade and market developments in most key regions around the world. To subscribe to the WRQ, please go to www.woodprices.com
Feb. 13, 2017 - U.S. softwood lumber was again the main global growth market in 2016 (the case since 2010) and supported firm to rising prices throughout the year. As usual, there are many change factors at work that will lead to unpredictable swings in lumber supply, demand and prices in 2017 and beyond.
Feb. 10, 2017 - If the experts are right and history is repeating itself, 2017 is shaping up to be a pretty tough year for Canadian wood businesses. The good news? We knew it was coming.
Feb. 6, 2017 - Weyerhaeuser Company reported fourth quarter net earnings to common shareholders of $551 million, or 73 cents per diluted share, on net sales of $1.6 billion. This compares with net earnings of $59 million, or 11 cents per diluted share, on net sales of $1.3 billion for the same period last year.

Fourth quarter results include after-tax earnings of $489 million from discontinued operations, primarily consisting of gains from the divestiture of the Cellulose Fibers pulp mills and printing papers business, and net after-tax charges of $44 million for special items. Excluding discontinued operations and special items, the company reported net earnings of $106 million or 14 cents per diluted share. This compares with net earnings from continuing operations before special items of $81 million for the same period last year and $172 million for third quarter 2016.

For the full year 2016, Weyerhaeuser reported net earnings attributable to common shareholders of $1.005 billion, or $1.39 per diluted share, on net sales of $6.4 billion. This compares with net earnings of $462 million on net sales of $5.2 billion for the same period last year. 2016 results include after-tax earnings of $612 million from discontinued operations related to the divested Cellulose Fibers segment.

Full year 2016 includes net after-tax charges of $141 million from special items. Excluding these items, the company reported net earnings from continuing operations before special items of $534 million, or 75 cents per diluted share. This compares with net earnings from continuing operations before special items of $382 million for the full year 2015.

"2016 was a transformational year for Weyerhaeuser. Through our merger with Plum Creek and the $2.5 billion divestiture of our Cellulose Fibers business, we became a focused timber, land and forest products company and nearly doubled the size of our timberland holdings," said Doyle R. Simons, president and chief executive officer. "In addition to completing these significant portfolio changes, we increased Adjusted EBITDA by nearly 55 percent, delivered more than $100 million of operational excellence improvements, captured significant merger synergies, and achieved the highest annual Wood Products earnings in over a decade. Finally, we returned cash to shareholders through a $2 billion share repurchase. Entering 2017, we remain strongly committed to driving industry-leading performance, continuing to capture benefits of the merger, and demonstrating disciplined capital allocation to drive superior value for shareholders."



Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control over 13 million acres of timberlands, primarily in the U.S., and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products. Our company is a real estate investment trust. In February 2016, we merged with Plum Creek Timber Company, Inc. In 2016, we generated $6.4 billion in net sales and employed approximately 10,400 people who serve customers worldwide. We are listed on the Dow Jones World Sustainability Index. Our common stock trades on the New York Stock Exchange under the symbol WY. Learn more at www.weyerhaeuser.com.
Feb. 6, 2017 - Norbord Inc. reported Adjusted EBITDA of US $114 million for the fourth quarter of 2016 versus $114 million in the prior quarter and $57 million in the fourth quarter of 2015. For the full year 2016, Norbord recorded Adjusted EBITDA of $383 million compared to $122 million in 2015 on higher North American OSB prices and higher shipment volumes. North American operations generated Adjusted EBITDA of $352 million compared to $95 million in the prior year and European operations delivered Adjusted EBITDA of $41 million versus $38 million in the prior year.

"2016 was an excellent year for Norbord and we more than tripled our Adjusted EBITDA over the prior year," said Peter Wijnbergen, Norbord's President and CEO. "US housing starts continued their steady recovery, driving increased North American OSB demand and prices. The fourth quarter of 2016 marked our eighth consecutive quarter of improved results as the seasonal slowdown in construction-related demand was less pronounced than usual. Channel inventories remain lean and demand in all our core markets remains strong, setting us up well as we enter 2017."

"Norbord's mills in both North America and Europe continued to deliver strong operational results in 2016, with seven mills setting annual production records. We captured the full $45 million in targeted merger synergies, reflecting the extraordinary effort across our company to quickly integrate Norbord and Ainsworth and realize on the opportunities to reduce costs, optimize sales and logistics, and share best practices."

"In Europe, our panel business delivered its 27th consecutive quarter of stable Adjusted EBITDA in US dollar terms, despite the post-Brexit translation headwind of a weaker Pound Sterling. OSB is accelerating market share gains versus plywood, driving double-digit demand growth in our key UK and German markets. Our project to modernize and expand the Inverness, Scotland OSB mill to serve this rapidly growing customer demand is on-schedule and within budget for start-up in the second half of this year."

Norbord recorded Adjusted earnings of $55 million or $0.64 per share (basic and diluted) in the fourth quarter of 2016 versus $58 million or $0.68 per basic share ($0.67 per diluted share) in the third quarter of 2016 and $16 million or $0.19 per share (basic and diluted) in the fourth quarter of 2015.  For the full year 2016, the Company recorded Adjusted earnings of $175 million or $2.04 per basic ($2.03 per diluted share) compared to an Adjusted loss of $14 million or $0.17 per share (basic and diluted) in 2015 that included a number of one-time merger-related expenses.  Adjusted earnings/losses exclude non-recurring items and use a normalized income tax rate:

Market Conditions

In North America, US housing starts were approximately 1.17 million in 2016, up 5% from 1.11 million in 2015, and the December seasonally-adjusted annualized pace of permits, the more forward-looking indicator, was 1.21 million.  Single family starts, which use approximately three times more OSB than multifamily, increased by 9% in 2016.  US housing economists are forecasting 2017 starts of approximately 1.25 million, a further 7% year-over-year improvement.

According to APA–The Engineered Wood Association, North American OSB production, which represents demand on the industry's mills, increased by 7% in 2016 to approximately 21.8 Bsf (3⁄8-inch basis), or 88% of the industry's operating capacity.  This compares to an estimated operating rate of 83% in 2015.

North American benchmark OSB prices improved significantly as the year progressed as new home construction activity and OSB demand continued to increase. The North Central price ranged from a low of $213 per Msf (7/16-inch basis) in February to a high of $310 in the summer, averaging $269 for 2016, up 29% from $209 in 2015.  

In Europe, Norbord's core panel markets remained strong, with double-digit OSB demand growth in both the UK and Germany. In the UK, where three of Norbord's four European mills are located, GDP grew at 2%, unemployment dropped below 5% and housing starts activity remained firm.  In Germany, Norbord's largest Continental European market, housing starts increased by 16% representing the eighth consecutive year of growth.

Reported European panel prices in US dollar terms were impacted by the significant devaluation of the Pound Sterling following the "Brexit" referendum in June. In local currency terms, OSB prices in the UK were 5% lower on average but have firmed by about 5% since their post-Brexit lows. On the continent, OSB prices were up slightly on average, after firming in the first half and softening in the second half of 2016.  UK particleboard and medium density fibreboard (MDF) prices were 4% lower due to sales mix.

Performance

North American OSB shipments for the fourth quarter were up 9% versus the third quarter and 10% versus the same quarter last year. Shipments for the full year increased 7% compared to the prior year. For the full year, Norbord's operating OSB mills produced at 94% of capacity (excluding the two curtailed mills in Huguley, Alabama and Chambord, Quebec), up from 88% in 2015 and in line with the increase in shipments. Annual production records were achieved at five of the Company's North American OSB mills.

Norbord's full year North American OSB cash production costs per unit decreased 3% versus 2015 due to increased production volume, lower raw material use, lower resin and energy prices, and the weaker Canadian dollar. Although full year average resin prices were lower than the prior year, they trended up modestly in the second half of 2016.

In Europe, shipments increased 2% over the prior year. All European panel mills ran on full operating schedules during the year, excluding maintenance and holiday shutdowns, producing at 99% of capacity in 2016, up from 97% in 2015 and in line with the increase in shipments. Annual production records were achieved at both OSB mills.

Norbord's mills delivered Margin Improvement Program (MIP) gains of $15 million in 2016, primarily from improved productivity and lower raw material use and despite an offset from higher maintenance-related costs. MIP gains are measured relative to the prior year at constant prices and exchange rates.

By the third quarter of 2016, Norbord had captured the full target of $45 million in cumulative (annual run rate) synergies from the merger, within 18 months of closing. One-time costs of $15 million were incurred to achieve these synergies.  In addition to these synergies, the merger is enabling the Company to avoid significant cash outlays it would otherwise incur for capital projects. Norbord estimates this capital cost avoidance at $35 million, which includes utilizing formerly idle assets throughout the Company. As the merger synergies target has been fully realized, Norbord will continue to report progress on continuous improvement initiatives through MIP.

In January 2016, the Board of Directors approved a $135 million investment over the subsequent two years to modernize and expand the Company's Inverness, Scotland OSB mill.  On-site work commenced during the second quarter and the unused second press from the Grande Prairie, Alberta mill was moved to Inverness during the third quarter. Norbord expects the new line to start up in the second half of 2017, with no disruption to existing production capacity in the interim.

Capital investments totaled $101 million in 2016, including $33 million related to the Inverness project, several debottlenecking and cost reduction projects across the Company's mills, and additional work to rebuild the press line at the curtailed Huguley, Alabama mill.  Norbord's 2017 regular capital expenditure budget is $90 million. In addition, the Company expects to invest most of the remaining $102 million budgeted to complete the Inverness project.  A further $30 million will be required to complete the necessary refurbishment work at Huguley, once a decision is made to restart the mill.

Operating working capital decreased by $7 million during the year to $118 million at year-end, primarily due to higher mill profit share attributed to the higher earnings and higher capital expenditure accruals which were partially offset by the impact of higher North American OSB prices and sales volumes on accounts receivable. Working capital continues to be managed at minimal levels across the Company.

At year-end, Norbord had unutilized liquidity of $506 million, consisting of $161 million in cash and $345 million in unused credit lines. The Company's tangible net worth was $905 million and net debt to total capitalization on a book basis was 41%, with both ratios well within bank covenants. The Company intends to permanently repay its $200 million 7.70% senior secured notes at maturity in February 2017.

Quebec Mill Exchange

On November 3, 2016, the Company closed a transaction with Louisiana-Pacific Corporation (LP) involving the exchange of OSB mills in the province of Quebec.  Norbord swapped ownership of its mill in Val-d'Or for LP's mill in Chambord. Production at both mills has been curtailed for a number of years. The Chambord mill has a stated production capacity of 470 million square feet (3⁄8-inch basis) and the Val-d'Or mill has a stated production capacity of 340 million square feet (3/8-inch basis). An accounting gain of $12 million (net of tax) was recorded on closing of the transaction.



Norbord Inc. is a leading global manufacturer of wood-based panels and the world's largest producer of oriented strand board (OSB).  In addition to OSB, Norbord manufactures particleboard, medium density fibreboard and related value-added products.  Norbord has assets of approximately $1.8 billion and employs approximately 2,600 people at 17 plant locations in the United States, Canada and Europe.  Norbord is a publicly traded company listed on the Toronto Stock Exchange and New York Stock Exchange under the symbol "OSB".
Jan. 31, 2017 - A new report published by Allied Market Research projects that the global engineered wood market is estimated to reach $41, 273 million by 2022, growing at a CAGR of 24.8 per cent from 2016–2022. North America and Europe, being the developed markets, account for nearly 70 per cent of global engineered wood production, while still maintaining high CAGRs.

Engineered wood demand is expected to remain high during the forecast period as it is an apt alternative to concrete and hardwood. Engineered wood products are widely used by architects, builders, code officials, and building designers aware of energy-efficient framing practices that conserve energy, speed-up construction, cut labour cost, and reduce waste.

"The rising popularity of engineered wood over hardwood is attributable to its cost-effectiveness and eco-friendly aspect. Also, stringent regulations with regards to CO2 emission and rapid deforestation are factors likely to propel the adoption of engineered wood. Despite the reservations, surrounding its usage due to safety concerns, composite wood has proved to be a huge commercial success," states Yogiata Sharma, research analyst of consumer goods research at AMR.

The market is expected to move at a higher pace in Europe and North America, owing to high disposable income and widespread awareness of the benefits of engineered wood among the populace. The engineered wood industry in Europe would be driven by the rise in demand for engineered timber, substantial use of resources, and increased import of raw wood from Asia-Pacific and LAMEA.

Other developing and emerging regions, such as Asia-Pacific, Latin America, and Africa, exploit their vast forestlands for timber and raw materials for various engineered wood products. In 2015-2016, countries in Asia-Pacific such as Japan, Indonesia, and India led the engineered wood market, as they are the main exporters of raw materials to North American and European countries. India is one of the emerging markets in Asia-Pacific engineered wood industry, currently accounting for 10 per cent of the Asia-Pacific engineered wood market share. It is estimated to register the highest CAGR of around 25 per cent from 2016 - 2022.

In LAMEA, Brazil and Chile show significant growth in the engineered wood market, owing to the high production of raw materials. These regions are expected to grow with double-digit CAGRs and witness entry of a number of market players. The engineered wood market is segmented based on the type of product, wherein plywood and glulam collectively account for nearly 54 per cent of the global market, and new entrant CLT is expected to grow with the highest CAGR of nearly 30 per cent during the forecast period.

On the basis of application, the non-residential construction would lead the market throughout the analysis period, owing to the continuously increasing construction of multistory building and bridges, globally.

Key Findings:

Increasing disposable income among middle and upper economic segments and increase in technical knowledge of machinery required in engineered wood product formation are the main reasons for their growth.

CLT segment possesses high market potential owing to its usage in building of mega structures and growth in nonresidential market segment.

Plywood and oriented strand boards (OSB) dominate the North American engineered wood in terms of volume market share, while I-beams and glulam lead the European market.

Overall, the non-residential segment possesses higher market share in the overall Engineered wood market.

Key players profiled in this report are Celulosa Arauco Y Constitución S.A., Weyerhaeuser Company, Boise Cascade Company, Roseburg Forest Product Company, Shenzhen Risewell Industry Co., Ltd., Louisiana Pacific Corporation, Lowes Companies, Inc., Georgia Pacific Wood Products, LLC, Universal Forests Products, Inc., 84 Lumber Company, Huber Engineered Wood LLC, and Patrick industries, Inc.
Jan. 31, 2017 - Hardwood fibre prices have slowly turned around this year with the HFPI price index being up 5.6 per cent from the 1Q/16 to the 3Q/16, according to the Wood Resource Quarterly.

The softwood fibre price index SFPI fell in the 3Q/16 both because of lower costs in local currencies and a stronger US dollar.

The two Global Wood Fibre Price Indexes were close to parity in the 3Q/16. The Hardwood Wood Fibre Price Index (HFPI) has rebounded by 5.6 per cent from the 1Q/16 when it reached an 11-year low. The biggest price increases this year have been in Brazil, Indonesia, Australia and Chile where prices have gone up despite the strengthening of the local currencies. However, hardwood fibre prices have not gone up in all markets this year. Hardwood pulplog prices were lower throughout Europe, Eastern Canada and the U.S. South.

Except for Russian pulpmills, which have by far the lowest hardwood fibre costs in the world, hardwood pulp-producing regions throughout North America, Europe and Latin America currently have wood costs ranging in a fairly narrow range between US$75/odmt to US$100/odmt. Five years ago, when the HFPI reached its all-time-high, this range was substantially wider at US$75/odmt to US$175/odmt.

Softwood chip and pulplog prices fell in the local currencies in much of Europe and

North America which, together with a stronger US dollar against the Canadian dollar and the Euro, resulted in a decline of the Softwood Wood Fibre Price Index (SFPI) in the 3Q/16. The SFPI is currently close to the lowest level in over ten years. During the past 12 months, softwood fibre costs in US dollar terms have fallen the most in the U.S. Northwest, British Columbia, France, Norway and Germany, while they have gone up the most in Brazil, New Zealand and Japan.

Note: The Global Wood Fibre Price Index is a weighted average of delivered wood fibre prices for the pulp industry in all regions tracked by the publication Wood Resource Quarterly. These regions together account for 85-90 per cent of the world’s wood-based pulp production capacity. The price is based on current quarter average prices, and country/regional wood fibre consumption data. The global average price for softwood and hardwood is calculated in nominal US$ per oven-dried metric ton (odmt) of wood fibre.



Global lumber, sawlog and pulpwood market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, wood chip, lumber and pellet prices, trade and market developments in most key regions around the world. To subscribe to the WRQ, please go to www.woodprices.com
Jan. 31, 2017 - Softwood lumber imports to China increased for the fourth consecutive year in 2016, reaching a new all-time high of 21 million m3, 21 per cent higher than in 2015, reports the Wood Resource Quarterly. Russian import volumes rose the most during 2016, while Finland and Sweden increased their market share more than the other major supplying regions.

China imported record-high volumes of softwood lumber in 2016 and softwood log imports reached their second highest level on record. Despite relatively pessimistic forecasts for wood demand early in 2016, China’s need for imported wood picked up during the summer and fall with import volumes of both logs and lumber being up about 20 per cent in the 4Q/16 as compared to the 4Q/15. Total importation of logs and lumber (in roundwood equivalents) reached almost 76 million m3 in 2016, which was up 17 per cent from 2015, and almost 38 per cent higher than five years ago, according to the Wood Resource Quarterly (WRQ).

Over the past decade, the importation of softwood lumber has grown much faster than that of softwood logs. From 2006 to 2016, lumber imports were up from just over two million m3 to over 21 million m3, while log import volumes were up from 20 million m3 to 34 million m3 during the same period.

From 2015 to 2016, Russia has increased its shipments of lumber to China by over three million to a total of 11.6 million m3 (this includes logs that have been canted to avoid log export taxes).

With lumber markets in the Middle East and Northern Africa (the MENA countries) and Europe having been relatively weak the past few years, many sawmills in the Nordic countries have increased their presence in the Chinese market with shipments being up over 35 per cent in 2016 from the previous year. Although lumber supply from Finland and Sweden still account for only six per cent of the total lumber imports, the share can be expected to increase in the coming years because of more intense marketing of predominantly higher-quality spruce lumber for the Chinese furniture, millwork and construction industries.

Import values for lumber to China rose during most of 2016 with average prices in December 2016 being about six per cent higher than in December 2015. The increases during 2016 came after two years of sharply declining prices, as reported in the latest WRQ (www.woodprices.com). The lower-cost lumber has consistently been from Russia and Canada, while the cost for lumber from Europe and Chile has been higher than the average prices, which have ranged between US$160-180/m3 in 2016.



Global lumber, sawlog, and pulpwood market reporting is included in the 52-page quarterly publication Wood Resource Quarterly (WRQ). The report, which was established in 1988 and has subscribers in over 30 countries, tracks sawlog, pulpwood, wood chip, lumber and pellet prices, trade, and market developments in most key regions around the world. To subscribe to the WRQ, please go to www.woodprices.com
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