Raymond James analyst Daryl Swetlishoff has revised the price target for Canfor Pulp (CFPUF, Financial), reducing it to C$1.50 from the previous estimate of C$1.75. Despite this adjustment, the analyst maintains an Outperform rating for the stock, indicating continued confidence in its potential performance. This revision reflects a reevaluation of the company's prospects and market conditions.
CFPUF Key Business Developments
Release Date: March 07, 2025
- Adjusted EBITDA (Lumber): $22 million in Q4, down from $64 million in Q3.
- Adjusted EBITDA (Pulp): $12 million in Q4, down $7 million from the prior quarter.
- Net Debt (Canfor Pulp): $83 million at the end of Q4.
- Available Liquidity (Canfor Pulp): $71 million at the end of Q4.
- Net Cash (Canfor excluding Canfor Pulp and duty loan): Approximately $115 million at the end of Q4.
- Capital Expenditures (Q4): Approximately $137 million, including $6 million for Canfor Pulp.
- Total Capital Spend (2024): $525 million, including $51 million for Canfor Pulp.
- Projected Capital Spend (2025 - Lumber): Approximately $250 million.
- Projected Capital Spend (2025 - Pulp): Approximately $50 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Canfor Pulp Products Inc (CFPUF, Financial) successfully executed strategic priorities, transforming its business structure to navigate future challenges.
- The company has improved its operating cost base and enhanced geographic diversification, with 70% of its lumber business now located outside of Canada.
- Lumber prices have steadily increased, supporting improved profitability, particularly in Western Canada.
- Canfor Pulp Products Inc (CFPUF) has a strong balance sheet, allowing it to evaluate strategic growth opportunities and consider share repurchases.
- The company is benefiting from a weak Canadian dollar and has a unique high-strength fiber characteristic, which helps minimize the impact of tariffs.
Negative Points
- 2024 was an extremely challenging year, with difficult decisions made to close high-cost assets in British Columbia and the US South.
- The company faces ongoing challenges with elevated duties and tariffs, impacting 20% of its sales.
- Global lumber demand remains tepid, with continued volatility and market uncertainty expected in the short term.
- There is uncertainty regarding fiber supply in 2025 due to elevated softwood lumber duties and potential additional tariffs.
- Canfor Pulp Products Inc (CFPUF) anticipates a significant reduction in shipments following the wind-down of one production line at Northwood.
