West Fraser Timber Co. Ltd. is reporting earnings of $27 million in the second quarter of 2012 on sales of $775 million.
For the first half of 2012, earnings were $10 million on sales of $1.5 billion.
In the quarter the lumber segment generated operating earnings of $34 million and EBITDA of $53 million. Lumber prices rallied strongly as improved U.S. demand combined with continuing Asian demand for Canadian lumber. Higher lumber prices also triggered a reduction in duties (from 15% to 10%) charged on softwood lumber exported to the U.S. from B.C. and Alberta for the month of June 2012.
The panels segment, which includes plywood, LVL and MDF, generated operating earnings in the quarter of $8 million and EBITDA of $12 million. Improved plywood and MDF prices were the main contributors.
Pulp and paper operations generated operating earnings of $14 million and EBITDA of $26 million. The average NBSK benchmark price for the quarter increased to US$900 per tonne from US$870 in the previous quarter but reduced NBSK production and shipments and increased chemical costs resulted in a marginal decline in operating earnings compared with the previous quarter.
West Fraser Timber expects results from their lumber and panels businesses to improve if U.S. new home construction continues to recover. Despite some encouraging signs, the current recovery still appears to be fragile and could be set back by adverse global economic events.
The company said the immediate outlook for their NBSK pulp business is negative as additional supply coming onstream will require market adjustments before prices will recover.
Hank Ketcham, West Fraser’s Chairman and Chief Executive Officer, said, “We are encouraged by this quarter’s results and we expect to see continuing operational improvements as a result of our extensive capital program and the efforts of all of our people. We are well positioned to take advantage of the anticipated recovery.”
Source: West Fraser Timber