Vancouver, B.C. – West Fraser Timber Co. Ltd. today reported earnings after discontinued operations of $19 million or $0.44 per share for the first quarter of 2011. Earnings from continuing operations were $20 million or $0.46 per share on sales of $687 million.
“We are pleased with our operating performance which produced another quarter of positive results despite a lack of recovery in U.S. housing and a strengthening Canadian dollar.” said Hank Ketcham, the Company’s Chairman, CEO and President. “We continue to focus on efficiency and cost control at every level of our business.”
The Company’s lumber and pulp operations were significant contributors to earnings in the quarter. Current quarter earnings were adversely affected by the stronger Canadian dollar and a $27 million ($0.60 per share) charge for long-term equity-based compensation.
Throughout 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 complementary measure of cash available prior to debt service, capital expenditures and income taxes. However, EBITDA is not a generally accepted earnings measure under International Financial Reporting Standards (“IFRS”) and does not have a standardized meaning prescribed by IFRS. Investors are cautioned that EBITDA should not be considered as an alternative to earnings or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating EBITDA, the Company’s method of calculating EBITDA may differ from the methods used by other entities and, accordingly, the Company’s use of that term may not be directly comparable to similarly titled measures used by other entities.
The lumber segment recorded operating earnings of $33 million and EBITDA of $55 million in the current quarter. SPF shipments were lower in the current quarter compared to the prior quarter as poor weather conditions affected truck and railcar availability.
The panel segment, which includes plywood, LVL and MDF, recorded break-even operating earnings and EBITDA of $4 million in the quarter. The MDF and LVL operations continue to operate on a curtailed basis while the three plywood mills ran at capacity.
Pulp & paper operations recorded operating earnings of $29 million and EBITDA of $47 million. Global inventory levels of NBSK are lower than normal which allowed for a price increase during the quarter. BCTMP prices have weakened during the quarter as new production in China adversely affected markets.
SPF and SYP lumber prices have weakened dramatically since the end of the first quarter of 2011, likely the result of the restarting of some previously-curtailed production without a balancing increase in demand. Prices for the Company’s construction products are expected to remain volatile until the U.S. housing industry experiences sustainable recovery. The strong NBSK pulp markets should continue as economic growth in the consuming regions continues to support a reasonable pulp price.
Mr. Ketcham noted: “We expected a slow and uneven recovery of the North American lumber industry, and that seems to be playing out. Fortunately, we continue to experience the benefits of strong NBSK pulp markets.”
Normal Course Issuer Bid
The Company also announces that it intends to apply to the Toronto Stock Exchange (the “TSX”) for approval to conduct a normal course issuer bid (“NCIB”) for up to 5% of its issued and outstanding Common shares in accordance with the TSX rules. The NCIB will be subject to TSX acceptance. Full details of the NCIB will be announced upon receipt of TSX acceptance of the NCIB.
West Fraser is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States.
SOURCE: West Fraser Timber Co.
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