On the rise West Fraser Timber Co. gained in the wake of reporting its earnings declined to $216-million in the third quarter of 2022, as inflationary cost pressures and slowing demand for the company’s products took a bite out of its financial results.
The Vancouver-based company says it earned $2.50 per diluted share for the period ended Sept. 30, 2022, compared to $460-million, or $4.20 per diluted share in the same period of 2021.
The company reported total revenue from sales of $2.09-billion, compared to $2.36-billion in the prior year’s quarter.
West Fraser says it is experiencing inflationary cost pressures across much of its supply chain, as well as availability constraints for labour and raw materials such as resins and chemicals, transportation and energy.
The company also announced Wednesday plans to redevelop its facility in Henderson, Texas by constructing a new mill next to the existing mill.
Capital investment for the new mill is an estimated $255 million with the start of construction expected to take place in the fourth quarter of this year.
Raymond James analyst Daryl Swetlishoff said: “While we have implemented further downward revisions to our financial estimates in the face of stubborn cash cost inflation across operating platforms we continue to see a favorable FCF outlook for the company with net debt poised to fall an additional $700-million through 2023. We recognize challenged affordability metrics and a difficult macro have heightened concerns in the U.S. housing market. However, seasonal and below B.C. cash cost trades along with a compelling valuation backstop our constructive view, particularly as end user inventory depletion has approached record low levels.”