Mr. Larry Hughes reports
WEST FRASER ("WFT") ANNOUNCES SECOND QUARTER RESULTS
West Fraser Timber Co. Ltd. had earnings of $74-million, or 87 cents per share, on sales of $1,053-million in the second quarter of 2014.
Operational results
In the quarter the company's lumber operations generated operating earnings of $81-million (first quarter: $79-million) and EBITDA (earnings before interest, taxes, depreciation and amortization) of $106-million (first quarter: $107-million). The results were substantially similar to the previous quarter as significantly higher shipments were offset by lower prices.
In the quarter the company's panel segment generated operating earnings of $10-million (first quarter: $7-million) and EBITDA of $13-million (first quarter: $11-million) as plywood prices and shipments improved.
In the quarter the company's pulp and paper operations generated operating earnings of $19-million (first quarter: $22-million) and EBITDA of $30-million (first quarter: $32-million). Although shipments were higher and prices were relatively similar to the previous quarter, increased costs contributed to the decline in earnings.
Outlook
Shipments of lumber increased sharply in the second quarter after the settlement of the 28-day strike at the port of Vancouver that occurred during March, and both SPF and SYP prices declined. As the strike-related lumber inventory backlog continues to clear and U.S. housing continues to gradually recover, lumber prices have stabilized and shown some improvement in early July. However, the company expects them to remain fairly volatile. Log costs are expected to trend higher in British Columbia as competition for purchased wood increases, but lumber productivity and cost reductions throughout the company's sawmills are expected to continue to improve over the next few quarters as it completes various major capital projects.
"We've expanded our lumber capacity with our acquisition of two sawmills in the second quarter and one in the first," said Ted Seraphim, West Fraser Timber's president and chief executive officer. "We are pleased with the integration of those operations and the contributions they will continue to make to our earnings."
Management's discussion & analysis
The company's management's discussion and analysis is available on the company's website and on SEDAR under the company's profile.
Conference call
Investors are invited to listen to the quarterly conference call on Thursday, July 17, 2014, at 8:30 a.m. (Pacific Time)(11:30 a.m. (Eastern Time)) by dialling 1-800-769-8320 (toll-free in North America). The call may also be accessed through the company's website.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
(in millions of dollars, except where indicated)
April 1 to June 30, Jan. 1 to June 30,
2014 2013 2014 2013
Sales $ 1,053 $ 900 $ 1,862 $ 1,763
Costs and expenses
Cost of products sold 709 576 1,225 1,117
Freight and other distribution costs 158 126 267 243
Amortization 40 37 82 77
Selling, general and administration 38 32 73 64
Equity-based compensation 2 (12) 3 20
------- ------- ------- -------
947 759 1,650 1,521
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Operating earnings 106 141 212 242
Finance (expense) (8) (7) (14) (14)
Exchange gain (loss) on long-term debt 12 (11) (1) (17)
Other income (expense) (7) 10 6 7
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Earnings before tax 103 133 203 218
Tax provision (29) (24) (57) (42)
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Earnings $ 74 $ 109 $ 146 $ 176
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Earnings per share (dollars)
Basic $ 0.87 $ 1.27 $ 1.71 $ 2.06
Diluted $ 0.87 $ 1.12 $ 1.66 $ 2.06
Comprehensive earnings
Earnings $ 74 $ 109 $ 146 $ 176
Other comprehensive earnings
Translation gain (loss) on
foreign operations (16) 11 1 16
Actuarial gain (loss) on
postretirement benefits (45) 58 (49) 6
------- ------- ------- -------
Comprehensive earnings $ 13 $ 178 $ 98 $ 198
We seek Safe Harbor.
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