Western Forest Products Witness 13% Drop in Lumber Sales Volume

SEATTLE (Scrap Monster): Vancouver, B.C.-based Western Forest Products, Inc. (WFP) has announced its results for the third quarter of 2017. The lumber sales volumes were impacted by extremely hot weather conditions which led to record low log harvest. The impact was partially offset by improved market demand and pricing. The lumber sales to China reported increase during the quarter.

The company reported adjusted EBITDA of $32.6 million in Q3 ’17, as compared with the adjusted EBITDA of $35.7 million during the third quarter of 2016. When matched with the prior quarter, the adjusted EBITDA fell by almost one-third. WFP had recorded adjusted EBITDA of $47.1 million during the second quarter of the current year. The net income too dropped sharply from $16.8 million a year before to $13.6 million in third quarter of 2017.

The log supply from coastal B.C region was severely impacted by dry weather conditions. However, this was more or less balanced by increased log and lumber prices on account of supply shortage and boosted demand in the market. The company reported revenue of $285.2 million during Q3 this year, as compared with $322.7 million during the same quarter a year before.

WFP’s lumber revenue fell by nearly 10% over the previous year to $212.5 million. The overall lumber sales volume declined by 13%. The total lumber production tumbled by almost 19% from 248 million board feet in third quarter of 2016 to 201 million board feet. The imposition of duties on log exports to the US impact cross-border shipments. However, the shipments to China improved, mainly on the back of improved market demand.

The total log shipments were down significantly by 43% during Q3 this year. The log production totaled 911,000 cubic metres, lower by almost one-fifth than the same period last year. The quarterly log revenue declined sharply from $70 million in Q3 2016 to $55.5 million in third quarter of 2017. By-products revenue remained essentially flat at $17.2 million as compared with the previous year.

The adjusted EBITDA for the initial nine months of the year was $113.7 million. The lumber revenue for the nine-month period totaled $650.9 million, down by almost 2% over the year. Lumber shipments were down by 9%. The log revenues declined even sharply by 12% during Jan-Sep ’17 to total $158.2 million. Log sales volume declined by 27%. Also, the combined lumber production during the first three quarters of the year totaled 622 million board feet.