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Rubber and Wood July 19, 2019 11:30:17 AM

West Fraser’s Earnings Dip on Lower Commodity Pricing Across Segments

Paul Ploumis
ScrapMonster Author
The increased mill productivity resulted in 5% surge in quarterly lumber production, in spite of production curtailments.

West Fraser’s Earnings Dip on Lower Commodity Pricing Across Segments

SEATTLE (Scrap Monster): West Fraser Timber Co. Ltd. announced second quarter 2019 results. The company’s operating earnings took a hit, mainly on account of softer commodity pricing in all segments. The quarterly sales improved from $1.241 billion in first quarter to $1.317 billion in Q2 2019. The adjusted EBITDA almost halved from $110 million to $56 million over the quarter.

The increased mill productivity resulted in 5% surge in quarterly lumber production, in spite of production curtailments. It must be noted that the company had announced permanent closure of Chasm, B.C. lumber mill in June, along with reduction of shift at 100 Mile House mill. West Fraser reported reduced inventories during the quarter, as lumber shipments exceeded production by almost 150 MMfbm. The lumber segment adjusted EBITDA fell from $84 million in Q1 to $39 million in second quarter 2019.

The production and shipments of panels remained more or less stable when matched with the prior quarter. The panels segment adjusted EBITDA dropped from $15 million to $10 million, due to lower plywood pricing.

ALSO READ: West Fraser Declares Temporary Production Halt at Northern Alberta Mills

The resumption of normal production schedule after maintenance shutdowns at its NBSK mills contributed to 12% surge in NBSK production during the quarter. The adjusted EBITDA for pulp and paper segment recorded decline from $11 million to $7 million over the previous quarter, primarily on account of softer pulp pricing and higher maintenance costs, said the company press release.

West Fraser expects the annual lumber production in 2019 to drop by at least 600 million board feet from the previous year.

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