West Fraser posts another strong set of results

Sales in Q2 were US$2.88bn. Both sales and profits were marginally down on Q1, 2022.

West Fraser’s North American Engineered Wood Product (EWP) division, which includes the panel products business, recorded Q2 adjusted EBITDA of US$623m (2022 Q1: US$730m), while the European EWP business recorded adjusted EBITDA of US$54m (2022 Q1: US$78m).

West Fraser said it expects its OSB shipments in North America to increase in 2022 as it accounted for a full year of contribution from Norbord, as well as recapturing production and shipments lost due to temporary disruptions to our operations in 2021, and as it continues to ramp operations at the Chambord OSB mill.

“However, transportation and logistics constraints across North America remain challenging and demand for our products is showing signs of slowing and as such we now expect OSB shipments in 2022 to be approximately 5.9 to 6.2 billion square feet, down modestly from our original guidance of 6.1 to 6.4 million billion square feet,” it said.

Work at the Allendale OSB facility is ongoing to prepare the mill for an eventual re-start when warranted by customer demand.

However, due to inflationary cost pressures and supply chain challenges the capital investment at the project is expected to increase approximately 10% from the original estimate of approximately US$70m and project completion has been shifted to the end of the first quarter of 2023.

In Europe, West Fraser has reduced its expectations for OSB shipments and now project them to be 

1.0 to 1.2 billion square feet (3/8-inch basis) in 2022, down slightly from the original guidance of 1.1 to 1.3 billion sq ft. 

“Across much of our supply chain, we continue to experience greater than usual inflationary cost pressures and availability constraints for labour, transportation, raw materials such as resins and chemicals, and energy,” the company said.

“We expect these cost pressures and availability constraints to remain elevated through 2022.”