Western Forest shows Q4 and year-end results
On February 17,2015 Western Forest released it's year-end results.Western Forest is a relatively small producer of lumber and logs and some pulp;it has a market capitalization of $810 million.It was formerly owned by an arm of Brookfield Management called Brookfield Special Situations.Brookfield had two secondary offerings and sold some warrants and now Western Forest is a largely public owned stock.This has given it more independence and it is making several of it's own strategies that differed from the past including selling off smaller operations and improving the productivity of it's major sawmills.It has also made it's sawmills more versatile so it can change to produce what the market demands.
Q4 Highlights
Western's fourth quarter was below it's annual trend.There were weaker log and lumber markets in China and Japan and so revenue declined from the value in Q4 2013.Western Red Cedar and Niche volumes were up almost 20% but Q4 revenues were $233 million in comparison to $242 million in 2013.Adjusted EBITDA was $15 million versus $24 million in Q4 2013.However Western did make some restructuring changes in this quarter.
Annual Highlights
The annual results were down slightly as well.Adjusted EBITDA was $109 million versus $129 million for 2013.However Western Forest reported record revenues of $1,037 million in 2014 in comparison to only $977 million in 2013.They put $11 million in restructuring(mostly in Nanaimo) and $18 million in their sawmills to improve their competitiveness.They also announced the sale of it's pulp mill for $22 million.They revamped their Duke Point and Saltair operation and ended their Ladysmith operation.
Helpers
2014 was a year of transition for Western Forest.Adjusted EBITDA was down about 18% but revenues were up 7%.Ordinarily this would have resulted in adjusted EBITDA of a slight increase or slight decrease instead of a reduction of 18%.Western also says that it's "flexible manufacturing platform" allowed it to shift production to those products with higher demand such as western red cedar.Western says that the change in their mix resulted in a price increase on average.WEF also says that the weaker Canadian dollar and the strong domestic market also helped.
2015 in Summary
There is no doubt the change in ownership has made Western more adaptable to market conditions.Also the changes in "flexible manufacturing platform" has allowed them to produce more of what is in demand and reduce volumes of less desirable products.But it is difficult to predict what the American and Japanese market will bring them in 2015.It is likely the Chinese market will be as strong as 2014 or a little stronger.Q1 2015 will tell us what the rest of the year will likely bring but Western Forest adjusted EBITDA will likely be in a range from $115 to $135 million.
Q4 Highlights
Western's fourth quarter was below it's annual trend.There were weaker log and lumber markets in China and Japan and so revenue declined from the value in Q4 2013.Western Red Cedar and Niche volumes were up almost 20% but Q4 revenues were $233 million in comparison to $242 million in 2013.Adjusted EBITDA was $15 million versus $24 million in Q4 2013.However Western did make some restructuring changes in this quarter.
Annual Highlights
The annual results were down slightly as well.Adjusted EBITDA was $109 million versus $129 million for 2013.However Western Forest reported record revenues of $1,037 million in 2014 in comparison to only $977 million in 2013.They put $11 million in restructuring(mostly in Nanaimo) and $18 million in their sawmills to improve their competitiveness.They also announced the sale of it's pulp mill for $22 million.They revamped their Duke Point and Saltair operation and ended their Ladysmith operation.
Helpers
2014 was a year of transition for Western Forest.Adjusted EBITDA was down about 18% but revenues were up 7%.Ordinarily this would have resulted in adjusted EBITDA of a slight increase or slight decrease instead of a reduction of 18%.Western also says that it's "flexible manufacturing platform" allowed it to shift production to those products with higher demand such as western red cedar.Western says that the change in their mix resulted in a price increase on average.WEF also says that the weaker Canadian dollar and the strong domestic market also helped.
2015 in Summary
There is no doubt the change in ownership has made Western more adaptable to market conditions.Also the changes in "flexible manufacturing platform" has allowed them to produce more of what is in demand and reduce volumes of less desirable products.But it is difficult to predict what the American and Japanese market will bring them in 2015.It is likely the Chinese market will be as strong as 2014 or a little stronger.Q1 2015 will tell us what the rest of the year will likely bring but Western Forest adjusted EBITDA will likely be in a range from $115 to $135 million.
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