Vancouver, B.C. – West Fraser Timber Co. Ltd. today 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.
These results compare with previous periods as follows:
1. In this News Release, reference is made to EBITDA (defined as operating earnings plus amortization). Management of the Company believes that, in addition to earnings, EBITDA is a useful performance indicator and is a useful measure of cash available prior to debt service, capital expenditures and income taxes. Reference is also made to Adjusted earnings from continuing operations (calculated as set out in the table described in footnote 2) and Adjusted basic EPS from continuing operations (collectively, with EBITDA, “these measures”). None of these measures is a generally accepted earnings measure under International Financial Reporting Standards (“IFRS”) and none has a standardized meaning prescribed by IFRS. Investors are cautioned that these measures should not be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities. 2. Refer to the table titled “Earnings Adjustments for Certain Non-Operational Items” in Management’s Discussion and Analysis of the third quarter 2012 results for details of adjustments.
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.
We expect results from our 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.
NBSK pulp prices have seen a slight recovery recently but the current and anticipated supply imbalance is likely to lead to continuing soft markets.
Hank Ketcham, West Fraser’s Chairman and Chief Executive Officer 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.”
West Fraser also announced that it has entered into an agreement to purchase the Sundance sawmilling and remanufacturing operations based in Edson, Alberta and 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 Hank Ketcham.
Completion of the transaction is scheduled for October 31, 2012.
Source: West Fraser
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