Interfor achieves record sales and lumber production in 2014

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Interfor/IHB
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Interfor recorded sales of C$389.0 million and Adjusted EBITDA of C$37.4 million in Q4’14. These figures compare with sales and Adjusted EBITDA of C$373.1 million and C$45.4 million in Q3’14, and C$315.3 million and C$36.2 million in Q4’13, respectively. Interfor achieved a number of significant milestones in 2014 with record sales of $1.4 billion and Adjusted EBITDA of C$169.3 million.

The company's lumber production in the fourth quarter of 2014 was 578 million board feet (≈1,36 million cubic meters) up 11 million board feet (25 thsd m3) or 1.9% compared to Q3’14 and up 108 million board feet (254 thsd. m3) or 23.0% compared to Q4’13. The production growth from Q4’13 primarily reflects the addition of two sawmills with the Tolleson acquisition and higher operating rates.

For fiscal 2014, Interfor's lumber production exceeded 2.2 billion board feet (≈5,1 million cubic meters), which was also a new Interfor record.

Average commodity lumber prices were modestly down across the board in the fourth quarter of 2014 as demand adjusted to reflect seasonal factors. The benchmark prices for Western SPF 2x4, SYP East 2x4 and HF Stud 2x4 9’ declined US$17, US$11 and US$18, respectively, as compared to the prior quarter. Demand for lumber in China softened in the fourth quarter due to the combination of credit tightening and slowing real estate activity.

The US dollar strengthened against the Canadian dollar during Q4’14, closing up 3.5% over September 30, 2014. The average rate of 1.1350 in Q4’14 was 8.2% higher than in the comparable quarter of 2013, which positively impacted Interfor’s net earnings reported in Canadian dollars.

For the near term outlook, Interfor sees that commodity lumber prices will be impacted by North American and overseas demand as well as supply side shifts within North America. With respect to demand, Interfor anticipates a gradual upward trend in US housing starts for 2015 on positive gains in employment and consumer confidence while demand in China is expected to reflect a moderated real estate market. Log supply constraints in certain parts of British Columbia are anticipated to continue, which may lead to reductions in available lumber industry production from that region. By contrast, modest increases in industry capacity and utilization rates are anticipated in the US South region.

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