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West Fraser Timber Co. (WFG) has reported a fourth-quarter loss of $94 million U.S. due to weak demand for lumber products amid a slowdown in the North American housing market.
The Vancouver-based company said that the Q4 loss represented a decline of 128% compared with earnings of $334 million U.S. during the same period of 2021.
West Fraser Timber reports its earnings in U.S. dollars.
The company said it is dealing with a pronounced slowdown in new home construction in both Canada and the U.S. that has been caused by higher interest rates.
Outlook of Markets
West Fraser Timber Co. Ltd. said it expects key trends will support new home construction demand in North America, adding demand for European products is expected to remain robust.
North America Outlook
West Fraser said the most significant uses for its North America lumber, oriented strand board, or OSB, and wood panel products "are residential construction, repair and remodelling and industrial applications."
The company said medium term it expects "an aging housing stock, the backlog of homes to be built due to lagging completions of previously started new home construction and greater entrenchment of work-from-home flexibility will help to offset near-term headwinds and spur repair and renovation spending that supports lumber, plywood and OSB demand."
Longer term, West Fraser said, "growing market penetration of mass timber in industrial and commercial applications is also expected to become a more significant source of demand growth for wood building products in North America."
West Fraser said 2023 North American OSB shipments are expected to be between 5.9 billion to 6.2 billion square feet (3/8-inch basis.)
West Fraser said demand for its European products is expected to remain robust over the longer term "as use of OSB as an alternative to plywood grows."
The company also said "near-term challenges, including relatively high and rising interest rates, ongoing geopolitical developments and inflationary pressures, are expected to cause a temporary slowing of demand for our products in Europe." But it added "we are confident that we will be able to navigate through these periods and respond to opportunities for long-term growth ahead."
West Fraser also said "further, an aging housing stock supports long-term repair and renovation spending and additional demand for our wood building products."
The company said it 2023, Europe OSB shipments are expected to be 1 billion to 1.2 billion square feet (3/8-inch basis.)
In 2023, "costs and availability constraints for transportation, raw materials such as resins and chemicals, and energy are expected to continue to moderate near term, while labour availability is expected to remain challenging," West Fraser said.
Source: West Fraser Timber Co. Ltd.