West Fraser reports slow improvement
July 17, 2014, Vancouver - West Fraser Timber Co. Ltd. reported earnings of $74 million or $0.87 per share on sales of $1,053 million in the second quarter of 2014.
In the quarter, lumber operations generated operating earnings of $81 million (Q1 - $79 million) and EBITDA of $106 million (Q1- $107 million). The results were substantially similar to the previous quarter as significantly higher shipments were offset by lower prices.
Panel segment generated operating earnings of $10 million (Q1 - $7 million) and EBITDA of $13 million (Q1 - $11 million) in the quarter as plywood prices and shipments improved.
Shipments of lumber increased sharply in the second quarter after the settlement of the 28-day strike at the port of Vancouver that occurred during March and both SPF and SYP prices declined. As the strike-related lumber inventory backlog continues to clear and U.S. housing continues to gradually recover, lumber prices have stabilized and shown some improvement in early July. However, we expect them to remain fairly volatile.
Log costs are expected to trend higher in B.C. as competition for purchased wood increases but lumber productivity and cost reductions throughout sawmills are expected to continue to improve over the next few quarters as the company completes various major capital projects.
"We've expanded our lumber capacity with our acquisition of two sawmills in the second quarter and one in the first," said Ted Seraphim, our President and CEO. "We are pleased with the integration of those operations and the contributions they will continue to make to our earnings."