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West Fraser announces first quarter results

April 25, 2017 - West Fraser Timber Co. Ltd. has reported its first quarter 2017 results.

First Quarter Highlights

• Sales improved by 7% compared to the previous quarter.
• Earnings up 56% from previous quarter.
• Improved product pricing across operating segments.
• Strong operating metrics despite some weather-related challenges.
• Quarter ending net debt to capital ratio of 16%.

Operational Results

Our lumber segment generated operating earnings of $152 million (Q4-16 - $107 million) and Adjusted EBITDA of $191 million (Q4-16 - $144 million).  Improved product pricing was the primary driver of improved results.  SPF shipments were lower than production due in part to weather-related transportation delays.

Our panels segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $12 million (Q4-16 - $17 million) and Adjusted EBITDA of $15 million (Q4-16 - $20 million).  Improved product pricing was offset by increased costs associated with our WestPine MDF plant restart.

Our pulp & paper segment generated operating earnings of $31 million (Q4-16 - $20 million) and Adjusted EBITDA of $40 million (Q4-16 - $30 million).  Higher pulp prices, higher BCTMP shipments and lower NBSK production costs were the primary drivers of improved results. Both Hinton Pulp and Slave Lake Pulp set quarterly production records.

Outlook

We will continue to focus on operational improvements which, together with warmer weather in Canada, should contribute to improved lumber production and shipments.  Our two NBSK pulp mills will undergo major scheduled maintenance during the balance of 2017 which will reduce normal NBSK pulp production by approximately 25,000 tonnes.  Our WestPine MDF mill is expected to gradually work through start-up issues over the balance of the year but we do not expect to achieve targeted production levels until late in 2017.

The most challenging immediate issue facing the Company is the current softwood lumber dispute.  We are expecting the U.S. Department of Commerce to announce preliminary countervail duty rates very shortly, to be implemented in May 2017, and potentially to be applied retroactively over a 90-day period.  West Fraser will receive its own duty rate.  Anti-dumping duty rates are expected to be announced in late June and implemented in July 2017 and could potentially be applied retroactively over a 90-day period.  Ted Seraphim, our President and CEO, said: "It is regrettable that our American neighbours have chosen to renew this long-standing dispute which creates so much uncertainty for lumber market participants and threatens to undermine some of the tremendous work our two countries have undertaken to grow the markets for North American lumber.  However, we are fully cooperating with the U.S. investigation as we continue to believe that the allegations of subsidy and dumping are groundless."

Mr. Seraphim also added: "I want to thank all of our employees for their tremendous effort and dedication to continuously improving our safety awareness and at the same time focusing on achieving operational excellence.  Our focus is not on any one quarter but on long-term results and we are certainly making progress towards achieving our goals."

April 25, 2017  By West Fraser Timber Co. Ltd.