West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — CIBC World Markets Investor Conference 2006
26 slides from West Fraser Timber's conference presentation, Feb 17, 2006
Slide 1: CIBC World Markets Investor Conference
CIBC World Markets Investor Conference February 17, 2006 Hank Ketcham Chairman, President & CEO West Fraser Timber Co. Ltd.
Slide 2: Presentation Overview
Presentation Overview West Fraser Overview Operating Strategy Key Industry Issues Conclusion Questions 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements The information contained in this presentation includes forward- looking statements the accuracy of which depends on a number of assumptions and is subject to risks and uncertainties. These include, but are not limited to uncertainties associated with the effect of general
Slide 4: West Fraser Overview
West Fraser Overview . Founded in 1955 Major North American integrated forest products company Headquartered in Vancouver, British Columbia Operations in B.C., Alberta and the U.S. South Approximately 6,900 employees 4
Slide 5: West Fraser Overview
West Fraser Overview . Lumber Panels Pulp & Paper 18 Sawmills 2 MDF 2 BCTMP 1 Reman. Plant 3 Plywood 2 NBSK 1 LVL 1 Liner & kraft paper 1 Newsprint (JV) 4.7 billion fbm Plywood: 820 MMsf (3/8”) 1.7 million tonnes MDF: 300 MMsf (3/4”) 5
Slide 6: West Fraser Overview: Weldwood acquisition
West Fraser Overview . December 2004: West Fraser acquired Weldwood from International Paper Company 6
Slide 7: West Fraser Overview: Successful Integration
West Fraser Overview Successful Integration Operations: Administrative: - Solid wood operating - Lumber sales centralized structure completed - NBSK sales group created - IT expansion completed - Woods centralized - Vcr office integrated - NBSK operating Underway: management - Systems integration es
Slide 8: West Fraser Overview: Synergies
West Fraser Overview Estimated $80 million in pre-tax synergies through: Best practices Streamlining and centralizing core functions Eliminating redundancy At December 31, 2005: synergies of almost $70 million achieved on a run rate basis 8
Slide 9: West Fraser Overview: Key Metrics
West Fraser Overview: Key Metrics (Dec. 31) ($ millions, except where indicated) 2005 2004 Sales 3,568 2,400 EBITDA 447 442 Net Earnings 108 212 EPS – diluted - $ 2.49 5.36 EBITDA - % Lumber 16 24 Panels 13 26 Pulp & Paper 6 7 9
Slide 10: West Fraser Overview: Balance Sheet
West Fraser Overview: Balance Sheet (Dec. 31) ($ millions, except where indicated) 2005 2004 Current Assets, excluding cash 926 853 Fixed Assets 2,230 2,345 Other 416 380 3,572 3,578 Current Liabilities, excl. debt 404 583 Debt, net of cash 775 602 Other 527 611 Shareholders’ Equity 1,866 1,782 3,57
Slide 11: West Fraser Overview: Sales & EBITDA (2005)
West Fraser Overview: Sales & EBITDA (2005) Sales EBITDA Panels Pulp & 14% Paper Pulp & 29% Lumber Paper Lumber 57% 13% 73% Panels 14% 11
Slide 12: Comparative Financial Performance
Comparative Financial Performance North American Integrated Forest Products Companies: 5-Year Average (2001-2005) EBITDA Margin 16 14 12 Graph includes: West Fraser, 10 Canfor, % International Paper, 8 Weyerhaeuser, Tembec. 6 4 2 0 WFT 12
Slide 13: Operating Strategy: Low-cost Producer
Operating Strategy: Low-cost Producer Low-cost operating strategy has facilitated consistent and continuous reinvestment West Fraser’s sawmills among the industry’s most modern, efficient and technologically advanced 13
Slide 14: Operating Strategy: Low-cost Producer
Operating Strategy: Low-cost Producer Low cost and efficient: - Quesnel River Pulp - Slave Lake Pulp - Alberta Newsprint 14
Slide 15: Operating Strategy: Low-cost Producer
Operating Strategy: Low-cost Producer Opportunities for improvement: - Hinton Pulp - Cariboo Pulp & Paper - Eurocan Pulp & Paper 15
Slide 16: Operating Strategy: Consistent Re-investment
Operating Strategy: Consistent Re-investment Capital Expenditures and Depreciation ($ millions) 2001 2002 2003 2004 2005 Total Cap. Expenditures 113 123 79 140 225 680 Acquisitions 30 - 6 1,125 - 1,160 Depreciation 123 135 142 154 255 809 16
Slide 17: Operating Strategy: Growth in Solid Wood
Operating Strategy: Growth in Solid Wood Fall 2005 New Quesnel Sawmill January 2006 17
Slide 18: Operating Strategy: Values and Culture
Operating Strategy: Values and Culture 18
Slide 19: Key Issues: Pulp Competitiveness
Key Issues: Pulp Competitiveness Bleached softwood kraft pulp Manufacturing Costs Index, Cost Level 2Q3 Source: Jaakko Poyry March 2005 200 150 100 50 0 Latin Europe USA Asia- Canada America Pacific 19
Slide 20: Key Issues: Mountain Pine Beetle
Key Issues: Mountain Pine Beetle Approximately 410 cubic metres of Lodgepole Pine affected in British Columbia 20
Slide 21: Key Issues: Environmental Campaigns
Key Issues: Environmental Campaigns 21
Slide 22: Key Industry Issues: Softwood Lumber Dispute
Key Industry Issues: Softwood Lumber Dispute At December 31, 2005: West Fraser duty deposits total approx. $370 million Canadian duty deposits total approx. US $5 billion Despite positive NAFTA rulings, the dispute continues Long-term resolution the goal 22
Slide 23: Key Industry Issues: Increased Competition
Key Industry Issues: Increased Competition Lumber Exports Between N. America & Europe Europe to N America 3000 N America to Europe 2500 Million Bf - Nominal 2000 1500 1000 500 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05* Source: WOOD Markets 23
Slide 24: Key Issues: Increased Competition
Key Issues: Increased Competition 36 6 35.5 5 35 4 34.5 % share of U.S. softwood % 34 3% lumber market (AF&PA) 33.5 2 33 1 32.5 32 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Other Offshore Canada 24
Slide 25: Conclusion
Conclusion Cost-focused culture The industry’s most modern and efficient sawmills Growth in core solid wood business Optimize pulp and paper business A secure, highly-integrated fibre supply Strong balance sheet provides flexibility for prudent and strategic growth Engaged and loyal workforce provid
Slide 26: Questions
Questions West fraser
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