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West Fraser to Curtail Lake Butler Sawmill Due to High Fiber Costs
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West Fraser Timber Co. Ltd. (WFG - Free Report) announced the indefinite curtailment of its sawmill in Lake Butler, FL, by the end of this month. This move better aligns the company's lumber capacity in the United States with demand.
Lake Butler Curtailment’s Impact on West Fraser
The Lake Butler Sawmill's indefinite curtailment will affect 130 employees. The company intends to mitigate the impact on affected employees by providing job opportunities at other mills.
The halt will reduce West Fraser's US lumber capacity by about 110 million board feet. West Fraser expects an additional impairment charge in the third quarter of 2024 due to the curtailment.
WFG’s Realignment Strategy
The Lake Butler sawmill has been struggling with high fiber costs. This combined with the present low-price commodity environment made it difficult for the company to operate the mill profitably.
The company's choice to curtail operations at the Lake Butler sawmill followed the permanent closure of its Fraser Lake sawmill in British Columbia back in January. West Fraser also announced the closure of its sawmill in Maxville, FL, and indefinite suspension of operations in Huttig, AR, in January.
The company believes that these actions, together with the plan to divest three pulp facilities and acquire Spray Lake Sawmills in 2023, will better position West Fraser.
West Fraser Stock’s Q2 Performance
In the second quarter of 2024, WFG’s total sales were around $1.7 billion compared with $1.6 billion in the year-ago quarter. The lumber segment’s adjusted EBITDA saw a loss of $51 million.
The company continued to face challenging demand markets in the second quarter, particularly in the lumber segment, wherein it executed curtailments at several locations for planned capital upgrades and customer needs.
However, the company expects its financial flexibility and low-cost position to continue to provide it with a competitive edge that will position it well to capitalize on the opportunities that lie ahead.
WFG’s Share Price Outperforms Industry’s Growth
Shares of the company have gained 35.9% over the past year compared with the industry's 3.8% growth.
Image Source: Zacks Investment Research
West Fraser's Zacks Rank & Stocks to Consider
West Fraser currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.09 per share. The consensus estimate for 2025 earnings has moved 7% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS shares have gained 127.1% in a year.
The Zacks Consensus Estimate for IAMGOLD’s 2024 earnings is pegged at 39 cents per share. The consensus estimate for 2024 earnings has moved 36% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG shares have gained 152.6% in a year.
The Zacks Consensus Estimate for Eldorado Gold’s 2024 earnings is pegged at $1.32 per share. The consensus estimate for 2024 earnings has moved 16% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 430%. EGO shares have gained 82.9% in a year.
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West Fraser to Curtail Lake Butler Sawmill Due to High Fiber Costs
West Fraser Timber Co. Ltd. (WFG - Free Report) announced the indefinite curtailment of its sawmill in Lake Butler, FL, by the end of this month. This move better aligns the company's lumber capacity in the United States with demand.
Lake Butler Curtailment’s Impact on West Fraser
The Lake Butler Sawmill's indefinite curtailment will affect 130 employees. The company intends to mitigate the impact on affected employees by providing job opportunities at other mills.
The halt will reduce West Fraser's US lumber capacity by about 110 million board feet. West Fraser expects an additional impairment charge in the third quarter of 2024 due to the curtailment.
WFG’s Realignment Strategy
The Lake Butler sawmill has been struggling with high fiber costs. This combined with the present low-price commodity environment made it difficult for the company to operate the mill profitably.
The company's choice to curtail operations at the Lake Butler sawmill followed the permanent closure of its Fraser Lake sawmill in British Columbia back in January. West Fraser also announced the closure of its sawmill in Maxville, FL, and indefinite suspension of operations in Huttig, AR, in January.
The company believes that these actions, together with the plan to divest three pulp facilities and acquire Spray Lake Sawmills in 2023, will better position West Fraser.
West Fraser Stock’s Q2 Performance
In the second quarter of 2024, WFG’s total sales were around $1.7 billion compared with $1.6 billion in the year-ago quarter. The lumber segment’s adjusted EBITDA saw a loss of $51 million.
The company continued to face challenging demand markets in the second quarter, particularly in the lumber segment, wherein it executed curtailments at several locations for planned capital upgrades and customer needs.
However, the company expects its financial flexibility and low-cost position to continue to provide it with a competitive edge that will position it well to capitalize on the opportunities that lie ahead.
WFG’s Share Price Outperforms Industry’s Growth
Shares of the company have gained 35.9% over the past year compared with the industry's 3.8% growth.
Image Source: Zacks Investment Research
West Fraser's Zacks Rank & Stocks to Consider
West Fraser currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , IAMGOLD Corporation (IAG - Free Report) and Eldorado Gold Corporation (EGO - Free Report) . CRS, IAG and EGO sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.09 per share. The consensus estimate for 2025 earnings has moved 7% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS shares have gained 127.1% in a year.
The Zacks Consensus Estimate for IAMGOLD’s 2024 earnings is pegged at 39 cents per share. The consensus estimate for 2024 earnings has moved 36% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG shares have gained 152.6% in a year.
The Zacks Consensus Estimate for Eldorado Gold’s 2024 earnings is pegged at $1.32 per share. The consensus estimate for 2024 earnings has moved 16% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 430%. EGO shares have gained 82.9% in a year.