West Fraser to acquire Sundance
In announcing its earnings for the third quarter of 2012, West Fraser Timber also said it has entered into an agreement to purchase the Sundance sawmilling and remanufacturing operations in Alberta.
The deal, expected to be completed for October 31, 2012, also includes Sundance’s related timber harvesting rights. The facilities have an operational capacity of approximately 150 million board feet and the annual allowable harvest is approximately 795,000 m3 of coniferous and 53,000 m3 of deciduous trees, including a temporary uplift of approximately 375,000 m3 until 2017.
“We are pleased to have an opportunity to grow our business in Alberta and we are excited to welcome the Sundance employees to the West Fraser team,” said West Fraser’s Chair and CEO Hank Ketcham.
For the third quarter, West Fraser reported earnings for the third quarter of 2012 of $55 million and earnings per share of $1.27 on sales of $772 million. For the first nine months of 2012, earnings were $65 million and earnings per share were $1.51, on sales of $2.2 billion.
In the quarter the lumber segment generated operating earnings of $37 million and EBITDA of $58 million. Lumber prices continued to reflect gradually improving U.S. demand combined with continuing steady demand for Canadian lumber from both Canada and Asia. Higher benchmark lumber prices triggered a reduction in duties charged on softwood lumber exported to the U.S. from B.C. and Alberta during the quarter.
The panels segment, which includes plywood, LVL and MDF, generated improved operating earnings in the quarter of $22 million and EBITDA of $25 million reflecting strong Canadian plywood prices.
Pulp and paper operations generated operating earnings of $17 million and EBITDA of $28 million, in line with the previous quarter. The average NBSK benchmark price for the quarter fell to US$853 per tonne from US$900 in the previous quarter but reduced costs resulted in a marginal improvement in operating earnings compared with the previous quarter.
The company said it expects results from its lumber and panels businesses to improve if U.S. housing construction continues to recover. Despite a continuing positive trend, the current recovery could be adversely affected by U.S. or global economic events, it said.
“We are encouraged by the signs of a recovery in the U.S. and we feel that we are well positioned to take advantage of the strengthening of the U.S. housing market, said Ketcham.