VANCOUVER, BC-- West Fraser Timber Co. Ltd. today reported earnings of $10 million and a diluted loss per share of $0.09 on sales of $720 million in the second quarter of 2011. For the first half of 2011, earnings were $29 million and diluted earnings per share were $0.68, on sales of $1.4 billion.
"Historic low housing starts and economic uncertainty continue to negatively affect lumber and panel prices," said Hank Ketcham, the Company's Chairman, President and CEO. "On a positive note, lumber shipments to Japan are stable while shipments to China are continuing to grow at a steady rate."
In the quarter the lumber segment generated an operating loss of $8 million and EBITDA of $11 million. Sharp declines in lumber prices combined with higher Canadian log costs and a stronger Canadian dollar were the key factors in the decline in earnings from the previous quarter. SPF shipments to offshore markets increased in the first half of 2011 but North American markets remain weak.
The panels segment, which includes plywood, LVL and MDF, generated an operating loss in the quarter of $5 million and negative EBITDA of $1 million. Weak plywood prices and higher log costs adversely affected earnings during the quarter. MDF and LVL operations continue to operate on a curtailed basis.
Pulp and paper operations generated operating earnings of $21 million and EBITDA of $38 million. Pulp prices increased in the quarter with the average NBSK benchmark price for the quarter increasing to US$1,025 per tonne, an increase of 6% from the previous quarter. Despite an eight-day unplanned shutdown at the Slave Lake pulp mill due to forest fires and a 13-day planned maintenance shutdown at the Cariboo pulp mill, total pulp production was marginally higher than in the previous quarter.
Without industry production curtailments, 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 limit demand. Although the pulp market appears to be slowing, we anticipate that demand will remain at levels that should support reasonable prices for the balance of the year.
Slave Lake Forest Fire
In June a devastating forest fire destroyed a third of the town of Slave Lake, Alberta where the Company operates a veneer plant and a pulp mill. Many of the Company's employees lost their homes and possessions and are trying to rebuild their lives in the aftermath of this disaster. The Company is grateful for the courage they displayed in helping to protect West Fraser's mills and in returning them to full production while at the same time dealing with their own personal tragedies.
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
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