Canfor Earnings: Lumber Markets Remain Challenged Despite One Month Pause on New Tariffs

No-moat-rated Canfor reported fourth-quarter results that were largely in line with our expectations as the company continues to navigate a challenging lumber market while struggles in the pulp and paper business persisted. Canfor’s net sales were roughly flat as gains in lumber were offset by pulp and paper, and the company reported an operating loss of CAD 46 million, driven by losses in both segments. That said, this was an improvement from the CAD 191 million loss a year ago as lumber pricing offered some relief. Additionally, Canfor is now navigating the threat of tariffs on its Canadian lumber products that were recently delayed again until early April. Roughly 20% of Canfor’s sales are exposed to Canadian duties and tariffs. While it’s unclear if the 25% additional tariff will resume and how long it will last if it does, prolonged tariffs could have a material impact on lumber producers with significant exposure to the region. As such, we have maintained our CAD 20 fair value estimate.