Norbord positive on business prospects in spite of Brexit26 July 2016
Wood-based panels producer Norbord says business fundamentals remain positive in spite of uncertainty caused by the UK’s Brexit vote.
Norbord’s comments on the market came in its Q2 financial results, which show its European division recorded a 10% improvement in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).
“The underlying fundamentals of our European business remain favourable in spite of the political uncertainty following the Brexit referendum,” said Peter Wijnbergen, Norbord's President and CEO.
“The UK is a net importer of panelboard and as a primarily UK-based producer, the recent pressure on Pound Sterling makes Norbord’s domestically-produced panels more competitive than imports.
“Our modernisation project at Inverness will lower our manufacturing costs and is underpinned by growing European OSB demand, largely driven by increasing substitution of OSB for higher cost plywood.”
Norbord’s European operations delivered EBITDA of US$11m in Q2, compared to US$10m a year ago, while the North American operations generated EBITDA of US$85m compared to US$11m in the same quarter last year.
In Europe, Norbord’s core panel markets in the UK and Germany continued to experience strong demand growth in the quarter.
Q2 average panel prices were in line with both the same quarter last year and the previous quarter. OSB prices were stable in the UK and continued to rise on the continent, resulting in average prices that were 4% higher year-over-year and 2% higher quarter-over-quarter.
Medium density fibreboard (MDF) and particleboard prices were 5% lower year-over-year due to increased import competition when the Pound Sterling was stronger earlier this year, but were in line with the previous quarter.
Norbord’s European shipments were 5% higher than the same quarter last year and 6% higher than the prior quarter. The European mills produced at 104% of stated capacity in the quarter, compared to 101% in the same quarter last year and 100% in the prior quarter due to improved productivity.
One of Norbord's European mills achieved a quarterly production record.