Canfor Earnings: Higher Lumber Prices Offer Some Relief Amid Economic Uncertainty

No-moat-rated Canfor reported first-quarter results that were largely in line with our expectations. Net sales rose 2.5% year over year as gains in the lumber segment were offset by lower sales in the pulp and paper segment. Canfor reported a CAD 28.5 million loss in the quarter, an improvement from the CAD 85.8 million loss in the first quarter a year ago. Canfor’s lumber business benefited from higher prices and reported a CAD 26 million loss in the quarter, which was also an increase from a year ago. That said, heightened economic uncertainty has raised concerns of a slowdown in building, which will likely loom over the lumber industry for the remainder of the year. While Canfor has reduced its exposure to Canada and potential tariffs in recent years, lumber markets rely on new residential construction and DIY projects that we expect will remain constrained for much of the year. As such, we have maintained our CAD 20 fair value estimate.