Interfor: Coronavirus leading to production cuts, capital expenditure reductions
March 19, 2020
VANCOUVER, British Columbia (News release) -- Interfor has announced it will implement a number of initiatives in order to adjust its business to operating conditions being impacted by COVID-19. "We are very focused on ensuring the health and safety of our employees as well as adapting to the evolving market conditions," said Ian Fillinger, Interfor's President and Chief Executive Officer. "In addition, Interfor will remain disciplined in its approach to capital deployment as it focuses on retaining a strong capital structure."
The two primary initiatives are:
Capital Expenditure Reductions
Interfor's multi-year strategic capital projects are structured in a manner that provides flexibility to adapt to evolving market conditions. As a result of the prevailing environment, the Company is planning to reduce its capital expenditures in 2020 and 2021 by a total of approximately $140 million. With this reduction, Interfor's 2020 capital expenditures are expected to be approximately $100 million and 2021 capital expenditures are expected to be substantially below $100 million. Interfor will re-evaluate its capital expenditures as market conditions continue to evolve.
In order to align production with the prevailing market, Interfor will temporarily reduce production across its operations in British Columbia, the Pacific Northwest and the US South. These curtailments are expected to reduce production by approximately 35 million board feet per week, which represents approximately 60% of Interfor's production capacity. These curtailments will initially be for a two-week period and will be re-evaluated regularly.