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West Fraser announces 2016 annual and fourth quarter results

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."

February 17, 2017  By West Fraser Timber Co. Ltd.