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Western Forest Prod (TSE:WEF)
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Western Forest Prod (WEF) AI Stock Analysis

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TSE:WEF

Western Forest Prod

(TSX:WEF)

Rating:52Neutral
Price Target:
C$12.50
▲(1.21% Upside)
Western Forest Products' overall stock score is driven by financial difficulties and valuation concerns, despite positive developments highlighted in the earnings call. The company's stable balance sheet and strategic improvements are overshadowed by cash flow volatility and external challenges.

Western Forest Prod (WEF) vs. iShares MSCI Canada ETF (EWC)

Western Forest Prod Business Overview & Revenue Model

Company DescriptionWestern Forest Products Inc. engages in the timber harvesting, sawmilling logs into specialty lumber, value-added lumber remanufacturing, and lumber purchasing and wholesaling businesses. Its products have applications in outdoor living; exterior appearance; interior living; and structural applications. The company sells its products in Canada, the United States, China, Japan, Europe, and internationally. Western Forest Products Inc. was founded in 1955 and is headquartered in Vancouver, Canada.
How the Company Makes MoneyWestern Forest Products generates revenue through its comprehensive portfolio of wood-based products. The company's primary revenue streams include the sale of lumber, logs, and wood chips. Lumber sales are a significant contributor to its earnings, with products tailored for construction, industrial, and specialty markets. Timber harvested from its forest tenure and private lands is sold as logs, targeting both domestic lumber mills and international buyers. Additionally, wood chips, a byproduct of lumber processing, are sold primarily to pulp and paper manufacturers. The company benefits from strategic partnerships and long-term relationships with clients across North America and Asia, enhancing its market reach and revenue potential. Furthermore, Western Forest Products' focus on sustainable forest management and certification helps it maintain a competitive advantage and access premium markets.

Western Forest Prod Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q1-2025)
|
% Change Since: -2.60%|
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
The earnings call highlights significant improvements in financial performance, strategic debt reduction, and operational efficiency. However, challenges remain, particularly regarding increased softwood lumber duties and ongoing uncertainties in U.S. trade policy. Despite these challenges, the company maintains a strong balance sheet and is focused on strategic growth initiatives.
Q1-2025 Updates
Positive Updates
Significantly Improved Financial Results
Q1 2025 adjusted EBITDA was $3.5 million, compared to negative $4.2 million in the same period last year, driven by higher lumber shipments and prices, stronger U.S. dollar exchange rates, and improved log prices and sales mix.
Debt Reduction and Credit Facility Extension
The company significantly reduced its debt, ending the quarter with a net debt-to-cap ratio of 4%, and extended its $250 million credit facility for three years to July 2028.
Successful Strategic Initiatives
Ratified a new six-year collective agreement with the USW, completed non-core asset sales for $76.5 million, and advanced site preparation for continuous dry kilns, with support from the BC Manufacturing Jobs Fund to reimburse up to $7.5 million of eligible expenses.
Operational Efficiency Improvements
Achieved 90% operational uptime at the Duke Point sawmill and above-target uptime of 99% for the first continuous kiln at the Saltair Sawmill.
Strong Sales and Marketing Performance
Wholesale lumber shipment growth of 28% year-over-year, with efforts to diversify the customer base and focus on strategic accounts.
Negative Updates
Increased Softwood Lumber Duties
Preliminary combined softwood lumber duty rate applicable to Western is approximately 34%, with potential additional non-cash duty expense of approximately US$43 million plus accrued interest of US$7 million in the second half of 2025.
Harvest Permitting Delays
Permitting delays in some tenures led to lean log inventories for certain BC sawmills.
U.S. Trade Policy Uncertainty
Uncertainty around U.S. tariffs and trade measures, including potential impacts from the Section 232 investigation, could affect market dynamics and pricing strategies.
Company Guidance
During the Q1 2025 results call, Western Forest Products highlighted several key metrics reflecting improved financial performance and strategic progress. The company reported an adjusted EBITDA of $3.5 million, a significant improvement from the negative $4.2 million in the same period last year. This was driven by increased lumber shipments and prices, a stronger U.S. dollar exchange rate, and improved log prices and sales mix, despite facing higher softwood lumber duties and lower external log sales volume. Western also completed significant non-core asset sales, generating $76.5 million in gross proceeds, and extended the maturity of its $250 million credit facility to 2028. The company also reported improvements in inventory turnover rates, with log and lumber turnover ratios rising by 6% and 12%, respectively. Additionally, Western reduced its debt, ending the quarter with a net debt-to-capital ratio of 4%. The company's strategic CapEx plans for 2025 include expenditures of $60 million to $65 million, with $30 million allocated to completing two continuous kilns. Despite uncertainties in the U.S. trade policy and potential tariffs, Western emphasized its focus on maintaining a strong balance sheet and diversifying its market presence to mitigate risks.

Western Forest Prod Financial Statement Overview

Summary
Western Forest Products is facing operational challenges with negative profitability margins over the TTM period. Despite a modest revenue increase, profitability remains a concern. The balance sheet is strong with low leverage and a high equity ratio, but negative returns on equity due to net losses are a downside. Cash flow improvements are visible but remain limited, reflecting liquidity management concerns. Overall, while the company exhibits financial stability, operational efficiencies and profit margins need significant attention.
Income Statement
45
Neutral
The company's TTM (Trailing-Twelve-Months) gross profit margin stands at 6.21%, which is significantly lower compared to historical figures, indicating declining profitability. The net profit margin is negative due to ongoing net losses, reflecting continued financial strain. Revenue growth is modest at 2.16% compared to the previous year-end, but EBIT and EBITDA margins remain negative, pointing to operational challenges.
Balance Sheet
60
Neutral
The debt-to-equity ratio is 0.08, indicating low leverage and financial stability. However, the return on equity is negative due to net losses, impacting overall investor returns. The equity ratio is 66.45%, which shows a strong equity base relative to assets, providing a buffer against potential liabilities.
Cash Flow
50
Neutral
The TTM free cash flow is positive but marginal at $4.7 million, showing some improvement from the previous negative trend. Operating cash flow to net income ratio is positive, suggesting better cash generation relative to net income. However, free cash flow growth rate is not particularly strong, indicating potential liquidity constraints.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.07B1.06B1.02B1.44B1.42B964.90M
Gross Profit72.20M90.20M50.60M254.50M399.00M171.60M
EBITDA-4.70M13.70M-35.10M137.00M317.70M107.00M
Net Income-21.60M-30.40M-68.50M61.70M201.40M33.10M
Balance Sheet
Total Assets837.60M915.50M915.40M932.80M959.00M852.20M
Cash, Cash Equivalents and Short-Term Investments4.20M7.90M2.30M15.80M130.00M2.90M
Total Debt50.30M105.00M104.60M20.60M18.30M93.70M
Total Liabilities279.30M349.20M347.50M281.10M341.80M346.60M
Stockholders Equity550.70M558.20M565.00M647.20M612.10M504.50M
Cash Flow
Free Cash Flow-400.00K-13.30M-78.20M-56.80M248.50M61.70M
Operating Cash Flow34.90M20.10M-33.80M-10.30M281.60M80.40M
Investing Cash Flow39.80M3.00M-38.60M-59.90M38.70M-14.50M
Financing Cash Flow-74.80M-17.50M58.90M-44.00M-193.20M-65.10M

Western Forest Prod Technical Analysis

Technical Analysis Sentiment
Negative
Last Price12.35
Price Trends
50DMA
12.23
Positive
100DMA
12.11
Positive
200DMA
12.56
Negative
Market Momentum
MACD
0.05
Positive
RSI
48.10
Neutral
STOCH
62.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:WEF, the sentiment is Negative. The current price of 12.35 is below the 20-day moving average (MA) of 12.66, above the 50-day MA of 12.23, and below the 200-day MA of 12.56, indicating a neutral trend. The MACD of 0.05 indicates Positive momentum. The RSI at 48.10 is Neutral, neither overbought nor oversold. The STOCH value of 62.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:WEF.

Western Forest Prod Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
60
Neutral
C$323.50M22.404.24%8.23%-26.79%-57.05%
58
Neutral
HK$18.25B4.78-7.57%3.74%-4.22%-42.54%
53
Neutral
C$8.08B3,150.31-1.80%1.75%-8.31%-191.58%
52
Neutral
C$131.66M-3.84%3.89%49.05%
49
Neutral
$649.35M-11.53%-7.60%50.15%
48
Neutral
$1.50B-19.38%-1.38%-64.10%
44
Neutral
$67.81M-13.50%-23.09%46.68%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:WEF
Western Forest Prod
12.35
-0.85
-6.44%
TSE:IFP
Interfor
12.55
-3.81
-23.29%
TSE:WFG
West Fraser Timber Co
99.82
-15.57
-13.49%
TSE:GFP
GreenFirst Forest Products
2.90
-0.22
-6.93%
TSE:CFP
Canfor
12.70
-1.81
-12.47%
TSE:ADN
Acadian Timber
18.03
1.51
9.14%

Western Forest Prod Corporate Events

Business Operations and StrategyFinancial Disclosures
Western Forest Products Faces Financial and Operational Challenges in Q2 2025
Negative
Aug 7, 2025

Western Forest Products Inc. reported a challenging second quarter of 2025, with an adjusted EBITDA of $0.5 million, significantly down from $9.4 million in the same period last year, primarily due to a $3.6 million inventory provision expense. The company faced a net loss of $17.4 million, compared to a net loss of $5.7 million in the previous year, amid declining lumber prices and operational challenges, including a fire at the Columbia Vista Sawmill and a strike at the La-kwa sa muqw Forestry Limited Partnership. Western is focusing on transitioning to higher-value products by advancing construction of continuous dry kilns, although some projects have been deferred to maintain financial stability. The company is also dealing with the impact of the US Department of Commerce’s antidumping rates, which could lead to significant export tax expenses.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$15.00 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Delistings and Listing ChangesStock Split
Western Forest Products Announces Share Consolidation Effective Date
Neutral
Jul 24, 2025

Western Forest Products Inc. announced the effective date for the consolidation of its common shares, which will reduce the number of issued and outstanding shares from approximately 316.7 million to about 10.6 million. The Toronto Stock Exchange has approved this share consolidation, and trading on a post-consolidation basis will commence on July 28, 2025. This move is expected to streamline the company’s share structure, potentially impacting shareholder value and market perception. The consolidation will involve adjustments to stock options and other share units, with Computershare acting as the exchange agent to facilitate the process for shareholders.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$0.50 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Western Forest Products to Release Q2 2025 Results and Host Conference Call
Neutral
Jul 1, 2025

Western Forest Products Inc. announced the release date for its second quarter 2025 financial and operating results, which will be available on August 7, 2025. The company will host a conference call on August 8, 2025, featuring discussions by key executives, including the CEO, CFO, and Senior Vice President, on the results and a Q&A session with analysts. This announcement is significant for stakeholders as it provides insights into the company’s performance and strategic direction, potentially impacting its market position and investor confidence.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$0.50 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Delistings and Listing ChangesStock Split
Western Forest Products Announces Share Consolidation
Neutral
Jul 1, 2025

Western Forest Products Inc. has announced the implementation of a share consolidation, consolidating its common shares on a 1-for-30 basis, following shareholder approval. This move, pending final regulatory approval, aims to streamline the company’s share structure, potentially impacting its market positioning and shareholder value.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$0.50 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Business Operations and Strategy
Fire Renders Western Forest Products’ Columbia Vista Sawmill Inoperable
Negative
Jun 30, 2025

Western Forest Products Inc. announced that its Columbia Vista Division sawmill in Vancouver, Washington, has been extensively damaged by a fire, rendering it inoperable. The mill, which produced 53 million board feet of lumber in 2024, primarily focused on Douglas Fir specialty products for Japan and U.S. markets. While no injuries were reported, the incident may impact the company’s operations and market supply, necessitating an investigation and assessment to determine the next steps.

The most recent analyst rating on (TSE:WEF) stock is a Hold with a C$0.50 price target. To see the full list of analyst forecasts on Western Forest Prod stock, see the TSE:WEF Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 21, 2025