Financial institution CIBC has adjusted its outlook on Canfor Corporation (CFPZF, Financial), reducing the price target from C$16 to C$15. Despite this revision, the firm maintains a Neutral rating on the shares.
CFPZF Key Business Developments
Release Date: May 09, 2025
- Adjusted EBITDA (Lumber): $61 million in Q1, up $44 million from the previous quarter.
- Southern Yellow Pine Production: Increased by 18% due to new investments in Alabama and Arkansas.
- Western Canada Production: Decreased by 18% following closures of high-cost operations.
- Adjusted EBITDA (Pulp): $21 million in Q1, up $9 million from the prior quarter.
- Net Debt (Canfor Pulp): $72 million at the end of Q1.
- Available Liquidity (Canfor Pulp): $82 million at the end of Q1.
- Debt (Canfor excluding Canfor Pulp): Approximately $94 million at the end of Q1.
- Available Liquidity (Canfor excluding Canfor Pulp): $1.3 billion at the end of Q1.
- Capital Expenditures (Consolidated): Approximately $122 million in Q1.
- Projected Capital Spend (Lumber 2025): Approximately $250 million.
- Projected Capital Spend (Pulp 2025): $45 million, including capitalized maintenance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Canfor Corp (CFPZF, Financial) has a strong balance sheet with significant financial flexibility, allowing it to manage current industry headwinds and pursue strategic growth initiatives.
- The company has completed several strategic initiatives, resulting in a lower cost, globally diversified lumber platform.
- Canfor Corp (CFPZF) has seen benefits from significant capital investments in its US Southern operations, contributing to improved cost structure and resilience.
- The company's Pulp business generated solid financial results in the first quarter, supported by improved productivity and higher pulp sales realizations.
- Approximately 70% of Canfor Corp (CFPZF)'s production in the first quarter originated outside of Canada, reflecting a significant transformation of its lumber platform and improved geographic mix.
Negative Points
- There is significant uncertainty in the broader economic landscape due to ongoing trade disputes, impacting demand and pricing volatility.
- Lumber pricing is anticipated to remain volatile through 2025, with potential impacts from elevated duties and tariffs.
- Canfor Corp (CFPZF) faces uncertainty with respect to fiber supply later in the year due to elevated softwood lumber duties and the current trade environment.
- The company expects lower pulp pricing in the second quarter as trade disruptions weigh on market conditions.
- Despite strategic changes, less than 20% of Canfor Corp (CFPZF)'s total sales revenue is exposed to duties or trade disputes, indicating ongoing vulnerability to trade-related challenges.
