As a result of the temporary and permanent curtailments of production announced to date, West Fraser expects lumber production in 2019 to be at least 600 million board feet lower than 2018. Company has completed two major maintenance shutdowns at NBSK mills and have resumed normal production schedules. It is expected that industry production reductions will have a more significant impact on lumber supply in the second half of 2019 as permanent closures are implemented and shipments are reduced as mill inventories are eliminated.
Forest fires followed by wet weather has resulted in low log inventories at some of our Alberta mills. The risk exists that it will be necessary to take more downtime due to a shortage of logs at some of our Alberta mills in addition to the downtime we have already announced at our plywood facility.
Second Quarter Highlights, according to West Fraser report:
- Softer commodity pricing in all segments reduces operating earnings relative to comparative periods.
- Cash flow from operations of $187 million for the quarter.
- Permanent closure of Chasm, British Columbia lumber mill announced in June along with shift reduction at 100 Mile House lumber mill.
- Lumber inventories reduced by approximately 150 million board feet.
- Sales dropped to $1.317 million compared to $1.834 million in 2018.
- Adjusted EBITDA $56 million compared to $593 million in 2018.
- Quarter ending net debt to capital ratio of 26% and available liquidity of $365 million.
- On July 18, 2019, available credit under our syndicated committed revolving credit facilities was increased by $350 million to $850 million and maturity date of these facilities and US$200 million syndicated term loan extended to August 28, 2024. Proforma for this increase, available liquidity totaled $715 million.
- As part of company's senior leadership transition plan, Ray Ferris replaced Ted Seraphim as its CEO.