West Fraser Timber Co. Ltd. has announced results for the first quarter of 2024 (“Q1-24”). For the first quarter, the company reported sales of $1.627 billion and earnings of $35 million, equivalent to $0.42 per diluted share. Adjusted EBITDA amounted to US$200 million, representing 12% of sales. Within the highlighted segments, adjusted EBITDA for the lumber segment was $10 million, while for the North American Engineered Wood Products (“NA EWP”) segment it reached $188 million. However, the European Engineered Wood Products segment (“EWP EWP”) recorded an adjusted EBITDA of ($1) million.
During the quarter, West Fraser repurchased 105,666 shares for a total of $8 million. In addition, the sale of the Hinton pulp mill to Mondi Group plc was completed, along with the sale of the Quesnel River Pulp mill and the Slave Lake Pulp mill to Atlas Holdings. In addition, the dissolution of the Cariboo Pulp & Paper (“CPP”) 50/50 JV with Mercer was announced, consolidating West Fraser as the sole owner/operator of CPP.
Sean McLaren, West Fraser’s president and chief executive officer, commented “Our North American OSB, plywood and other engineered products had another solid quarter in Q1’24, with solid demand driven by strength in new home construction, which carried over from the fourth quarter. This contrasted with ongoing demand weakness in our European region. EWP and the North American lumber business, particularly for SYP lumber with its increased exposure relative to repair and remodeling applications.”
In terms of liquidity and capital allocation, cash and short-term investments decreased to $711 million as of March 29, 2024, while capital expenditures in the first quarter were $122 million. There was $24 million in dividends paid during the quarter and a dividend of $0.30 per share payable in the second quarter of 2024 was announced.
In the economic outlook, favorable trends in new home construction in North America are expected to continue to support demand over the medium to long term. However, there are near-term uncertainties related to interest rates and housing affordability that could affect demand in the near term.
On the operations side, total lumber shipments in 2024 are anticipated to be similar to 2023 levels, despite persistently weak market conditions that increase downside risk for some business areas. The company expects to continue to invest between $450 million and $550 million in 2024, subject to market conditions.
