Canfor Earnings: Macroeconomic Headwinds Constrain Lumber Prices, but Shares Look Attractive

No-moat Canfor reported first-quarter results that were severely affected by ongoing challenges in the lumber market. Revenue decreased roughly 38% year over year as steep declines in lumber prices were met with lower volume. Slowing housing demand in the United States continued to weigh on lumber demand, but a somewhat resilient repair and remodel market provided some relief in the quarter. Canfor reported a $208 million operating loss in the first quarter, compared with a $740 million profit a year ago, as lower volume raised per unit costs. That said, this was a roughly $100 million improvement sequentially due to a modest rise in European demand. We've decreased our fair value estimate to CAD 27 per share from CAD 30 due to our expectation of lower lumber prices through 2023 than we had previously anticipated.