Download PDF

1. Company Snapshot

1.a. Company Description

West Fraser Timber Co. Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy.It offers spruce-pine-fir and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products.The company also provides northern bleached softwood Kraft pulp and bleached chemical thermo-mechanical pulp used to produce various paper products, including printing and writing papers, specialty grades, and various tissue products.


It sells its products to major retail chains, contractor supply yards, and wholesalers, as well as industrial customers for further processing or as components for other products in Canada, the United States, China, Europe, Asia, and other countries.West Fraser Timber Co. Ltd.was founded in 1955 and is based in Vancouver, Canada.

Show Full description

1.b. Last Insights on WFG

West Fraser Timber Co. Ltd.'s recent performance was negatively impacted by a challenging quarter with negative EBITDA and a wider-than-expected Q3 loss on lower-than-expected revenues. The company's adjusted earnings before EBITDA amounted to a loss of US$144 million, and it reported a third-quarter net loss of US$204 million. Analysts have adjusted their fair value estimate downward to CA$115.50 per share, citing caution following recent earnings fluctuations and inventory write-downs. TD Securities lowered the price target to $96 from $98.

1.c. Company Highlights

2. West Fraser's Q3 2025 Earnings: Navigating the Cycle Trough

West Fraser reported a significant decline in financial performance for Q3 2025, with an adjusted EBITDA loss of $144 million, largely due to an extended cycle trough in the industry. The company's EPS came in at -$3.66295, missing analyst estimates of -$2.44801. Revenue was impacted by a $67 million out-of-period duty expense related to the finalization of Administrative Review 6. The lumber segment posted a negative $123 million adjusted EBITDA, while the North America EWP segment and Pulp and Paper segment also reported losses. The Europe business was the sole bright spot, generating $1 million of adjusted EBITDA.

Publication Date: Oct -25

📋 Highlights
  • Q3 2025 Adjusted EBITDA Loss:: West Fraser reported a $144M negative adjusted EBITDA, driven by extended cycle trough conditions and a $67M out-of-period duty expense from AR6.
  • Segment Performance:: Lumber (-$123M), EWP (-$15M), and Pulp/Paper (-$6M) posted losses, while the Europe business generated $1M adjusted EBITDA.
  • 2025 Shipment Guidance Narrowed:: SPF and SYP lumber shipment guidance reduced to lower the top end, with CapEx guidance unchanged at $400–450M.
  • Liquidity Strength:: Maintains $1.6B in available liquidity and a strong cash position, despite cutting 12% of lumber capacity (820M board feet) to manage the downturn.
  • Operational Efficiency Focus:: Implements lean inventories, efficient procurement, and asset portfolio management, with a 20–25% Q4 capacity curtailment planned.

Segment Performance

The company's segment performance was largely affected by the challenging market conditions. The lumber segment, which is a significant contributor to the company's revenue, reported a substantial loss. The North America EWP segment also struggled, posting a negative $15 million adjusted EBITDA. However, the Europe business showed some resilience, generating a small profit.

Guidance and Outlook

West Fraser narrowed its 2025 shipment guidance, reducing the top end of the range for SPF and SYP lumber, while maintaining other guidance. The company remains cautious about the near-term outlook but is optimistic about its longer-term prospects. The 2025 CapEx guidance remains $400-450 million, and the company is focused on a balanced capital allocation strategy.

Operational Efficiency and Cost Management

The company has taken steps to manage its asset portfolio and reduce costs. West Fraser has removed 820 million board feet of lumber capacity, representing about 12% of its prior capacity. The company is also focusing on lean inventories and efficient procurement, which has been a source of strength. As the company stated, "We've been working on working capital management, and we've made significant strides in that area, with a focus on lean inventories, efficient procurement, and strong execution."

Valuation and Growth Prospects

West Fraser's current valuation metrics reflect the challenging market conditions. The company's P/E Ratio is -41.0, and the P/S Ratio is 0.86. Analysts estimate revenue growth of 12.9% next year, which may indicate a potential turnaround in the company's fortunes. The company's strong balance sheet, with $1.6 billion in available liquidity, provides a foundation for weathering the current downturn.

3. NewsRoom

Card image cap

West Fraser To Record Near $200 Million Asset Impairment Loss in Q4 As It Reduces OSB Capacity

Dec -04

Source:

Card image cap

West Fraser Reduces OSB Capacity

Dec -04

Source:

Card image cap

CIBC Says "High-cost" Lumber Producers Thrown Lifeline

Nov -27

Source:

Card image cap

West Fraser Timber (TSX:WFG): Fresh Look at Valuation Following Recent Share Price Uptick

Nov -20

Source:

Card image cap

RBC Sees Acquisition Opportunities for West Fraser (WFG) as Wood Products Market Weakens Further

Nov -19

Source:

Card image cap

Interfor Q3 Loss Widens on Weak Lumber Prices; Warns of Impact from New U.S. Tariffs

Nov -06

Source:

Card image cap

West Fraser Reduces Lumber Capacity

Nov -06

Source:

Card image cap

Basic Materials Roundup: Market Talk

Oct -24

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.80%)

6. Segments

Lumber

Expected Growth: 4.83%

Strong demand from the US housing market, driven by low interest rates and government incentives, coupled with supply chain constraints and transportation bottlenecks, have contributed to the 4.83% growth of West Fraser Timber Co. Ltd.'s lumber segment.

North America Engineered Wood Products

Expected Growth: 4.83%

Strong demand for single-family housing and repair and remodeling activities in North America, driven by low interest rates and government incentives, contributed to the 4.83% growth of West Fraser Timber Co. Ltd.'s Engineered Wood Products segment. Additionally, the company's strategic investments in capacity expansion and product diversification also supported growth.

Pulp & Paper

Expected Growth: 4.5%

West Fraser Timber Co. Ltd.'s Pulp & Paper segment growth of 4.5% is driven by increasing demand for packaging materials, strong lumber prices, and cost savings from operational efficiencies. Additionally, the company's strategic acquisitions and investments in modernizing its mills have improved productivity and reduced costs, contributing to the segment's growth.

Europe Engineered Wood Products

Expected Growth: 4.83%

Strong demand for sustainable building materials, increasing adoption of engineered wood products in European construction, and West Fraser's strategic expansion into the region drive the 4.83% growth. Additionally, government initiatives promoting eco-friendly infrastructure development and rising consumer preference for environmentally responsible products contribute to the segment's growth.

7. Detailed Products

Lumber

West Fraser Timber Co. Ltd. offers a wide range of lumber products, including spruce-pine-fir, hemlock, and western red cedar, suitable for construction, renovation, and DIY projects.

Plywood

The company provides a variety of plywood products, including sheathing, flooring, and specialty panels, designed for durability and versatility.

Engineered Wood Products

West Fraser Timber Co. Ltd. offers engineered wood products, such as glue-laminated timber (Glulam) and laminated veneer lumber (LVL), for structural and non-structural applications.

Pulp and Paper Products

The company produces a range of pulp and paper products, including kraft pulp, packaging paper, and specialty papers.

Bioenergy

West Fraser Timber Co. Ltd. generates bioenergy from wood waste and other biomass sources, providing a renewable energy source.

8. West Fraser Timber Co. Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for West Fraser Timber Co. Ltd. is medium due to the availability of alternative materials such as steel and concrete for construction purposes.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the customer base and the lack of concentration of buyers in the timber industry.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of a few large suppliers of timber and the dependence of West Fraser Timber Co. Ltd. on these suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high capital requirements and regulatory barriers to entry in the timber industry.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the timber industry and the need for companies to compete on price and quality.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.93%
Debt Cost 6.09%
Equity Weight 93.07%
Equity Cost 14.35%
WACC 13.77%
Leverage 7.45%

11. Quality Control: West Fraser Timber Co. Ltd. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Acadian Timber

A-Score: 6.1/10

Value: 3.8

Growth: 5.2

Quality: 5.4

Yield: 9.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

View Full Report
Stock-Card
Stella-Jones

A-Score: 5.7/10

Value: 5.7

Growth: 8.2

Quality: 5.3

Yield: 4.0

Momentum: 2.0

Volatility: 8.7

1-Year Total Return ->

View Full Report
Stock-Card
Reliance Steel & Aluminum

A-Score: 5.3/10

Value: 4.6

Growth: 6.1

Quality: 5.6

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

1-Year Total Return ->

View Full Report
Stock-Card
UFP Industries

A-Score: 5.0/10

Value: 5.8

Growth: 6.4

Quality: 6.0

Yield: 3.0

Momentum: 1.5

Volatility: 7.0

1-Year Total Return ->

View Full Report
Stock-Card
Sylvamo

A-Score: 4.7/10

Value: 8.3

Growth: 3.4

Quality: 5.6

Yield: 6.0

Momentum: 0.0

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
West Fraser Timber Co

A-Score: 4.5/10

Value: 6.7

Growth: 4.1

Quality: 4.2

Yield: 3.0

Momentum: 1.5

Volatility: 7.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

86.24$

Current Price

86.24$

Potential

-0.00%

Expected Cash-Flows