Wood-based panel giant Norbord has reported an adjusted EBITDA of US$383m in 2016, a more than threefold increase from 2015.
Annual production at seven mills last year reached record levels while modernisation and expansion of its Inverness mill in Scotland was on track for start-up in the second half of 2017.
In North America, the North Central benchmark OSB price averaged $269 per Msf, up 29 percent over 2015, with the North American mills producing at 94 percent capacity, up from 88 percent in 2015.
North American operations generated adjusted EBITDA of $352m compared to $95m in the prior year while European operations delivered adjusted EBITDA of $41m versus $38m in the prior year.
“US housing starts continued their steady recovery, driving increased North American OSB demand and prices,” said Peter Wijnbergen, Norbord’s president and CEO.
He said $45m in synergies had been achieved from the integration of the Norbord and Ainsworth businesses.
“In Europe, our panel business delivered its 27th consecutive quarter of stable adjusted EBITDA in US dollar terms, despite the post-Brexit translation headwind of a weaker Sterling Pound.
“OSB is accelerating market share gains versus plywood, driving double-digit demand growth in our key UK and German markets. Our project to modernize and expand the Inverness, Scotland OSB mill to serve this rapidly growing customer demand is on-schedule and within budget for start-up in the second half of this year.”
In North America, US housing starts were approximately 1.17 million in 2016, up five percent from 2015. Single family homes, which use approximately three times more OSB than multi-family, increased by nine percent in 2016. US housing economists are forecasting 2017 starts of approximately 1.25 million, a further 7 percent year-over-year improvement.
In Europe, Norbord’s core panel markets remained strong, with double-digit OSB demand growth in both the UK and Germany.
In the UK, where three of Norbord’s four European mills are located, GDP grew at two percent, unemployment fell under five percent and housing starts activity remained firm.
In Germany, Norbord’s largest market on the European continent, housing starts increased by 16 percent—the eighth consecutive year of growth. Reported European panel prices in US dollar terms were impacted by the significant devaluation of the Sterling Pound following Brexit.
In local currency terms, OSB prices in the UK were five percent lower on average but have firmed by about five percent since their post-Brexit lows.
On the continent, OSB prices were up slightly on average, after firming in the first half and softening in the second half of 2016.
UK particleboard and medium density fibreboard (MDF) prices were four percent lower due to sales mix.
Source: Timber Trades Journal