West Fraser rides the wave of resurgent OSB demand in the US

West Fraser Reports Strong Recovery in OSB Demand, Increases North American Shipments Guidance for 2023

Wood products giant West Fraser has announced that its oriented strand board (OSB) business experienced a recovery in demand during the second quarter of this year. As a result, the company has expressed confidence in increasing its North American OSB shipments guidance for 2023. Although West Fraser anticipates a temporary weakness in near-term demand for its European engineered wood products (EWP) segment, it has reiterated its 2023 OSB shipments guidance, expecting them to be moderately higher than the levels seen in 2022.

In terms of financial performance, West Fraser reported a group adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of US$80 million for the second quarter of 2023, up from US$58 million in the same period last year. Within this, the North American EWP segment achieved an adjusted EBITDA of US$126 million, while the European EWP business recorded US$19 million.

West Fraser also noted that the seasonally adjusted annualized rate of US housing starts stood at 1.43 million units in July, which is a decrease from the 1.64 million units reported in June. Despite this, the company remains optimistic about the long-term growth prospects of the North American housing market, which is a key driver of demand for its wood products.

West Fraser’s decision to increase its North American OSB shipments guidance for 2023 reflects the positive momentum it has experienced in the second quarter. The recovery in demand for OSB, which is commonly used in construction and renovation projects, indicates a strong rebound in the housing and construction sectors. This is a significant development for West Fraser, as the company is one of the largest producers of OSB in North America.

However, the company recognizes that there may be challenges ahead for its European EWP segment. It expects a temporary weakness in demand due to factors such as supply chain disruptions and uncertainty surrounding the ongoing COVID-19 pandemic. Despite this short-term setback, West Fraser remains committed to its long-term growth strategy and believes that the European market will eventually recover.

Overall, West Fraser’s solid financial performance in the second quarter demonstrates its resilience and ability to adapt to changing market conditions. The company’s focus on operational efficiency and cost management has allowed it to navigate through challenging times and capitalize on opportunities for growth. With its increased North American OSB shipments guidance for 2023, West Fraser is well-positioned to benefit from the recovering housing market and meet the growing demand for wood products in the years to come.

John O Mahony

John O Mahony

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