West Fraser reports Q3 earnings of C$55M, up from C$52M a year earlier, on sales up 13.7% to C$878M; results reflect lower lumber prices offset somewhat by improved pulp prices compared to previous quarter, says CEO

VANCOUVER, British Columbia , October 28, 2013 (press release) – West Fraser Timber Co. Ltd. (TSX:WFT) today reported earnings of $55 million or $1.29 per share on sales of $878 million in the third quarter of 2013. These results compare with previous periods as follows:

($ millions except earnings per share ("EPS")) Q3-13 Q2-13 YTD-13 Q3-12 YTD-12
Sales 878 900 2,641 772 2,227
EBITDA1 113 178 432 101 200
Operating earnings 73 141 315 65 87
Earnings 55 109 231 52 57
Basic EPS ($) 1.29 2.54 5.40 1.21 1.34
Adjusted earnings 2 68 107 278 52 77
Adjusted basic EPS ($)2 1.57 2.49 6.48 1.21 1.80
(1) In this News Release, reference is made to EBITDA (defined as operating earnings plus amortization). Our management believes that, in addition to earnings, EBITDA is a useful performance indicator and is a useful measure of cash available prior to debt service, capital expenditures and income taxes. Reference is also made to Adjusted earnings (calculated as set out in the tables described in footnote 2) and Adjusted basic EPS (collectively, with EBITDA, "these measures"). None of these measures is a generally accepted earnings measure under International Financial Reporting Standards ("IFRS") and none has a standardized meaning prescribed by IFRS. Investors are cautioned that these measures should not be considered as an alternative to earnings, earnings per share or cash flow, as determined in accordance with IFRS. As there is no standardized method of calculating any of these measures, our method of calculating each of them may differ from the methods used by other entities and, accordingly, our use of any of these measures may not be directly comparable to similarly titled measures used by other entities.
(2) Refer to the table titled "Earnings Adjustments for Certain Non-Operational Items" in Management's Discussion and Analysis of our third quarter 2013 results for details of these adjustments.
Operational Results

In the quarter our lumber operations generated operating earnings of $57 million (Q2 - $103 million) and EBITDA of $83 million (Q2- $125 million). The weaker results compared to the previous quarter reflect lower lumber prices during the current quarter.

Our panel segment generated operating earnings of $6 million (Q2 - $6 million) and EBITDA of $9 million (Q2 - $10 million) in the quarter. Higher plywood and MDF prices were offset by higher log costs and reduced MDF production.

In the quarter our pulp and paper operations generated operating earnings of $29 million (Q2 - $20 million) and EBITDA of $40 million (Q2 - $31 million). Higher prices, a slightly weaker Canadian dollar and improved NBSK production contributed to the improved results.

The Mountain Pine Beetle Plan (the "MPB Plan")

On October 24, 2013 we announced a MPB Plan to address some of the effects of the mountain pine beetle infestation in the interior of British Columbia. The MPB Plan consists of the exchange of certain timber rights, the closure of our Houston, B.C. sawmill and significant mill upgrades for each of our Smithers and 100 Mile House, B.C. sawmills. Further information about the MPB Plan is available in our news release of October 24 which may be viewed at www.westfraser.com.

Outlook

Both SPF and SYP lumber prices began the quarter at low levels but improved by the end of the period. U.S. housing starts remained relatively flat, a reflection of the slow recovery, but the longer-term trend continues to appear positive. Lumber prices could continue to be volatile as U.S. housing continues to recover. We expect to achieve lumber productivity improvements and cost reductions over the next several quarters as we complete various capital projects. Pulp prices are improving in the fourth quarter as several producers have announced price increases.

"Our third quarter results reflect lower lumber prices offset somewhat by improved pulp prices compared to the previous quarter." said Ted Seraphim, our President and CEO. "Given our strong balance sheet and strong cash generation from our operations we remain focused on our aggressive capital spending program over the next few years as we fully modernize our operations." Mr. Seraphim also reiterated the Company's support for our employees and families affected by the Houston mill closure. "We made a very difficult decision last week and our full attention is on working closely with affected employees to ensure that they have every reasonable opportunity to find new employment."

Management's Discussion & Analysis ("MD&A")

The Company's MD&A is available on the Company's website: www.westfraser.com and on the System for Electronic Document Analysis and Retrieval at www.sedar.com under the Company's profile.

West Fraser

We are an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. We have operations in western Canada and the southern United States.

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