Record revenues for WFP
Feb. 18, 2015 - Western Forest Products reported annual revenue in 2014 grew six per cent to a record $1,036.9 million compared to $977.5 million earned in 2013. Increased lumber sales volumes and positive lumber sales mix, the benefit of a weaker CAD relative to the USD, and a strong domestic log market all contributed to this result.
WFP’s timberlands harvest decreased five per cent in 2014 from the previous year due primarily to dry-weather conditions in the third quarter of 2014. The success in purchasing logs and standing timber in the open market largely offset the reduced harvest volume. This enabled WFP to achieve a three per cent increase in lumber production, as compared to 2013. Lumber production in 2014 was the highest annual lumber production volume for the Company in the last eight years. The increased production in 2014, in part, allowed the company to meet the strong demand for our WRC lumber products.
Weakening markets in China and Japan in the second half of 2014 impacted pricing for logs and lumber, and led to reduced 2014 adjusted EBITDA margin, in comparison to 2013. Increased labour costs, as a result of a new labour agreement, higher stumpage, and harvesting in higher cost timberlands operations also contributed to the year-over-year reduction in adjusted EBITDA.
During the year, Western implemented various optimization initiatives including combining its northern Vancouver Island timberlands operations; consolidating its Nanaimo-area manufacturing operations; and downsizing its Japan sales offices, including the closure of its Osaka office. The company expects these structural changes will improve its operating results and lead to reduced administrative costs.
Net income of $68.4 million in 2014 decreased from $125.4 million in 2013, primarily due to a deferred income tax recovery of $26.5 million in 2013, lower adjusted EBITDA in 2014 and an incremental $10.1 million in restructuring charges in 2014.
Subsequent to year-end, on February 6, 2015, WFP completed the sale of its former pulp mill site and related assets in Squamish, B.C. at a purchase price of $21.8 million. Proceeds of the sale will be used to pay down outstanding debt. The company intends to use