TSX:WFG - Post Discussion
Post by
retiredcf on Aug 10, 2022 9:19am
RBC
August 9, 2022
West Fraser Timber Co. Ltd.
West Fraser announces production curtailment in BC
NYSE: WFG | USD 89.52 | Outperform | Price Target USD 120.00
Sentiment: Neutral
West Fraser announces production curtailment in BC. West Fraser Timber announced that it is permanently curtailing approximately 170 mmfbm of combined production at its Fraser Lake and Williams Lake sawmills, and approximately 85 mmsf of production at its Quesnel plywood mill, through the elimination of one shift at each facility. The capacity reductions will occur over the course of Q422. As context, an annualized production impact of 170 mmfbm equates to ~2.8% of the 6,000 mmfbm of combined SPF and SYP shipments embedded in West Fraser's guidance for 2022 (at the mid-point of each guidance range).
Timber and transportation shortage challenges led to curtailment decision. The company mentioned that access to available timber is becoming increasingly challenging in BC, and ongoing transportation constraints have negatively impacted West Fraser's ability to reliably access markets. As such, the company is moving to better align the company's operating capacity with available timber and transportation. We highlight that during its Q222 earnings call on July 28, the company stated that it continued to face transportation issues that could cause the company to revise its operating schedules lower (please click here). We expect a small rise in W. SPF lumber prices as a result of this announcement.
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