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West Fraser reports results for second quarter of 2023

West Fraser Timber reported the second quarter results of 2023. Sales for the company was $1.608 billion and earnings of $131 million, or $1.57 per diluted share.

Other quarter highlights include:

• Adjusted EBITDA of $80 million, representing five percent of sales
• Pulp & Paper segment Adjusted EBITDA¹ of $74 million, including $24 million of inventory write-downs
• Released 2022 Sustainability Report
• Subsequent to quarter-end, announced an agreement to sell Hinton, Alberta pulp mill to Mondi Group plc
• Subsequent to quarter-end, extended maturities of revolving credit and term loan agreements

“Early in the second quarter of 2023, we continued to experience challenging demand markets, particularly in the Pulp & Paper segment where we managed through several unscheduled downtime events at our mills, including an extended maintenance shutdown at Hinton Pulp as well as curtailment of our Cariboo Pulp mill related to fibre supply constraints. Combined with declining pulp prices that led to a significant inventory write-down, the Pulp & Paper segment experienced higher losses than expected. Notwithstanding these challenges, we did see signs of demand improvement for some of our key wood-building products as the quarter unfolded against a backdrop of mortgage rates well above year-ago levels. Our North America EWP segment saw particular improvement this quarter, with recovering demand in our OSB business, which has given us sufficient confidence to increase our North American OSB shipments guidance for 2023. As in the prior quarter, the product and geographic diversification of our European Engineered Wood Panels segment provided another positive EBITDA contribution that helped offset some of the weakness in our other businesses,” said Ray Ferris, West Fraser’s president and CEO.

“The West Fraser team continues to manage through the market cycle and while there have been indications that the upward trend in mortgage rates may be nearing an end and that new home construction has stabilized, we will continue to operate with financial discipline, leveraging our strong balance sheet to reinvest in our operations and return capital to shareholders. We believe our financial flexibility remains a competitive advantage that allows us to continue our core strategy of being a low-cost producer of wood building products while also preparing us to capitalize on opportunities as the demand environment becomes more favourable in the years ahead.”