Pulp and Paper Canada

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West Fraser reports sales up 7% over the prior quarter in Q2 results


July 27, 2020
By P&PC Staff

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West Fraser Timber Co. Ltd. has released its results for the second quarter of 2020, reporting sales of $1.276 billion, up seven per cent from the previous quarter.

COVID-19 impact

As a result of the various impacts of COVID-19, the company made a number of adjustments to operating schedules starting in March of 2020 and continuing into the second quarter of 2020.

The impact on 2020 production was a reduction of approximately 140 MMfbm of SPF lumber, 80 MMfbm of SYP lumber, 60 MMsf of plywood, and 19,000 tonnes of NBSK pulp.

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As the second quarter progressed, demand for lumber and plywood proved to be more resilient than originally estimated at the start of the pandemic. The higher demand levels, coupled with low inventories in the supply channel and production curtailments, led to an increased in pricing during the quarter.

“The safety, health and well-being of our employees and the communities in which we operate remain our primary focus,” says Ray Ferris, president and CEO of West Fraser, in a statement. “I am proud of the efforts of all our employees to adapt and safely continue our operations, serve our customers, and preserve and enhance value through a very difficult period.”

Operational results

West Fraser’s lumber segment generated operating earnings in the quarter of $66 million (Q1-20 – $19 million) and adjusted EBITDA of $156 million (Q1-20 – $106 million).

The improvement was due primarily to higher SYP prices and SPF shipment volumes, partially offset by lower SPF prices. The price variance resulted in an increase in adjusted EBITDA of $23 million compared to the previous quarter with the balance coming from volume, cost and productivity improvements despite the unpredictable operating conditions.

The current quarter included temporary curtailments of SPF and SYP production of 170 MMfbm compared to 50 MMfbm in the previous quarter.

Pulp and paper

West Fraser’s pulp and paper segment generated operating earnings in the quarter of negative $1 million (Q1-20 – nil) and adjusted EBITDA of $10 million (Q1-20 – $11 million).

Increased pulp prices were offset by lower net shipment volumes and higher fibre costs.

The Cariboo NBSK mill was temporarily shut down for four weeks during the quarter in response to low fibre availability, and we extended the shut by 12 days to complete the annual maintenance outage.

This shutdown resulted in 19,000 tonnes of lower production during the quarter. Despite the downtime, NBSK production was in line with the prior quarter, reflecting improved performance at the Hinton pulp mill.

Read the full Q2 2020 financial report, including panels segment information and market outlook, at the West Fraser site.