Thursday, July 22, 2010

West Fraser Announces Second Quarter Results

Vancouver, B.C. –

West Fraser Timber Co. Ltd. today reported earnings after discontinued


operations of $63 million or $1.46 per share on sales of $772 million in the second quarter of

2010 and earnings after discontinued operations of $83 million or $1.91 per share, on sales of

$1.5 billion for the first half of 2010.

“Although the improved results were driven largely by higher prices for all products, we

benefited from higher production and shipments by our lumber division, as well as from our

continued focus on cost control across the Company.” said Hank Ketcham, the Company’s

Chairman, President and CEO.

These results compare with previous periods as follows:

($ million except earnings

2010 2009


per share (“EPS”)



Sales 1,460 772 688 1,170 612


1 254 151 103 (17) 8


Operating earnings from

continuing operations 156 103 53 (140) (50)

Earnings from continuing

operations 97 62 35 (102) (23)

Earnings after discontinued

operations 83 63 20 (122) (39)

Diluted EPS after discontinued

operations ($) 1.91 1.46 0.45 (2.85) (0.91)



Throughout this News Release, reference is made to EBITDA (defined as operating earnings plus amortization and asset impairments).


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 Canadian generally accepted accounting principles (“GAAP”) and does not have a standardized meaning prescribed by

Canadian GAAP. Investors are cautioned that EBITDA should not be considered as an alternative to earnings or cash flow as determined in

accordance with Canadian GAAP. 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.

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Operational Results

In the quarter the lumber segment generated operating earnings of $47 million and EBITDA of

$75 million. The positive results reflect continued strong pricing during most of the quarter for

both SPF and SYP lumber, as well as greater production and shipments. Shipments to China

increased 30% in the quarter compared to the previous quarter. Towards the end of the quarter

and into July lumber prices declined reflecting oversupply and a continuing weak U.S. housing


The panel segment, which includes plywood, LVL and MDF, generated operating earnings in the

quarter of $15 million and EBITDA of $20 million. Plywood prices improved in the quarter

with the average benchmark price increasing 14% from the previous quarter. MDF and LVL

operations continue to operate on a curtailed basis while the three plywood mills ran at near

capacity levels.

Pulp and paper operations generated operating earnings of $36 million and EBITDA of $49

million. Pulp prices increased in the quarter with the average NBSK benchmark price for the

quarter increasing to US$993 per tonne, an increase of 13% from the previous quarter. Planned

maintenance downtime at both NBSK mills and the Quesnel BCTMP mill reduced production in

the quarter by approximately 36,000 tonnes.


Lumber prices in the second half of the year are expected to be lower than in the first half of the

year as low U.S. housing starts will continue to dampen demand. Housing starts in Canada are

likely to support reasonable demand for plywood, although increasing imports of U.S. plywood

could temper price increases. Pulp markets are weakening due to reduced demand in China. As

a result we anticipate that pulp prices will be under pressure through the third quarter.

The Company

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.

Forward-Looking Statements

This news release contains historical information, descriptions of current circumstances and

statements about potential future developments. The latter, which are forward-looking

statements are included under the heading “Outlook”, and are presented to provide reasonable

guidance to the reader but their accuracy depends on a number of assumptions and is subject to

various risks and uncertainties which are also described under this heading. Actual outcomes

and results will depend on a number of factors. Accordingly, readers should exercise caution in

relying upon forward-looking statements and the Company undertakes no obligation to publicly

revise them to reflect subsequent events or circumstances, except as required by applicable

securities laws.

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