West Fraser Reports Loss

By 250 News

West Fraser Timber Co. Ltd. reported a loss of $3 million on sales of $782 million in the fourth quarter of 2007 and a loss of $34 million  on sales of $3,316 million for 2007. T

The fourth quarter loss reflected the benefit of a $67 million income tax recovery which includes $30 million related to a statutory tax rate reduction.

West Fraser's Chair, President and CEO, Hank Ketcham, states: "We are obviously experiencing a very severe down cycle with a combination of the collapse of the U.S. housing market and a very strong Canadian dollar. While our results are disappointing, our people continue to work very hard to ensure that we come out of this downturn in a position to continue to create value for our shareholders."

Operational Results

The company's lumber operations produced EBITDA for the quarter of -$45 million, compared to EBITDA of -$27 million for the third quarter of 2007, reflecting a decline in the price of lumber.

To date, West Fraser has implemented or announced several lumber production curtailments in Canada in response to declining markets totaling approximately 450 MMfbm on an annualized basis. In addition, the Company today announced additional curtailments to be implemented in certain sawmills in the U.S. operations totaling approximately 350 MMfbm on an annualized basis.

Rail service reliability continued to be a significant problem for the Company.

Panel operations generated EBITDA for the quarter of $13 million compared to $19 million in the previous quarter with the Canadian plywood market remaining strong while MDF and LVL markets weakened.

Pulp and paper operations generated EBITDA of $37 million compared to $26 million in the previous quarter reflecting, in part, increased shipments. U.S. dollar pulp prices strengthened during the fourth quarter but were largely offset by the strong Canadian dollar.

West Fraser's CEO  doubt things will get better this year.  North American lumber markets continue to be extremely weak and will not improve until additional production curtailments occur or the U.S. housing market recovers. Most analysts believe that such recovery is unlikely to occur in 2008. Pulp markets are expected to remain strong in the near term.

"There is very little we can do about the U.S. housing crisis or the strong Canadian dollar. What we can do, and are doing, is focusing on reducing unnecessary costs and improving efficiencies," said Ketcham.

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