West Fraser announces 2018 first quarter results
April 27, 2018
By West Fraser
By West Fraser
April 27, 2018 - West Fraser has announced its 2018 first quarter results.
- Earnings of $197 million or basic EPS of $2.53
- Adjusted earnings1 of $231 million or Adjusted basic EPS of $2.98
- Adjusted EBITDA1 of $379 million or 27.8 per cent of sales
- Reinvested $104 million through capital expenditure and returned $58 million to shareholders through share buybacks and dividends
- Transportation challenges were a significant headwind in the quarter
Our lumber segment generated operating earnings of $189 million (Q4-17 - $232 million) and Adjusted EBITDA of $282 million (Q4-17 - $258 million). This quarter’s results were unfavorably impacted by severe winter weather, significant transportation challenges and a full quarter of export duties. Both SPF and SYP production were higher than the prior quarter, but SPF production was slightly lower than the prior year.
Our panels segment generated operating earnings in the quarter of $25 million (Q4-17 - $20 million) and Adjusted EBITDA of $28 million (Q4-17 - $24 million). The plywood market was strong throughout the quarter with pricing well ahead of 2017 levels. Plywood shipments were held back by transportation challenges as well.
Our pulp & paper segment generated operating earnings of $58 million (Q4-17 - $48 million) and Adjusted EBITDA of $70 million (Q4-17 - $60 million). The major factors contributing to the increase in operating earnings were higher Canadian dollar pulp prices and an increase in NBSK shipments offset by lower BCTMP shipments, again due to transportation headwinds.
"This was a challenging quarter operationally. Weather and transportation challenges were significant headwinds to production and shipments. I also want to congratulate Ray Ferris on taking on the role of president and chief operating officer. I look forward to working even closer with Ray as we continue to build upon the great efforts of all our employees," said Ted Seraphim, chief executive officer.
We will continue to focus on operational improvements which should contribute to growing production in lumber and MDF versus the prior year. In the first quarter, results were adversely affected by transportation service disruptions resulting in a substantial increase in finished good inventory levels. We are uncertain when the backlog of shipments will be cleared and we will likely incur additional storage, freight and other distribution costs. Our pulp mills do not have any scheduled major maintenance shutdowns during the balance of 2018.
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.