Canfor is a lumbering company based out of Vancouver, Canada. Canfor is one of the leading lumber companies in North Americam, ranking near the top in both sales and production. Canfor sales revenues are created from 2 major business sectors; Lumber and Pulp and Paper, with a majority of the sales driven by the lumber sector.  With a majority of its revenue driven by the lumber sector, Canfor is more exposed to the real estate market than other lumber companies, such as Domtar, whose focus is on paper sales. After being a consistently profitable company this decade, Canfor has seen a sharp decline in profits the last 2 years, facing a net loss in 2007 and 2008.
Canfor's business sectors, like other lumbering companies, are greatly exposed to the demand of the real estate market and the overall economic climate. Due to the downturn in the real estate market and a lack of new homes being built and remodeling projects, Canfor sales and lumber production dropped by 18%.  Pulp and Paper production dropped 10% and sales dropped 11%.  Because Canfor’s sawmills are located within different provinces of Canada and various states in the US, Canfor is responsible to abide by the unique environmental legislation that each province or state contains. Canfor has combated the slowdown in demand by shutting down mills in order to reduce costs. While sales have decreased, the company has a strong balance sheet with over 365$ million in cash on hand.
Canfor's Net Loss before taxes and interests dropped 13% from $529 million in 2007 to $463 million in 2008, with an Operating Loss of $158 million in 2008 compared to a Operating loss of $273 million 2007. The large scale losses were attributed to the significant decline in the real estate market. Although sales dropped by 21% from 2007 to 2008, Canfor was able to cut costs by closing down sawmills which explains the decrease in Net Loss and Operating Net Loss. Prior to experiencing the losses, Canfor was able to sustain a profit of 415$ million in 2004, 91$ million in 2005, and 471$ million in 2006.
(Million square feet, 3/8" basis)
Lumber Sales (57% of 2008 Revenue) Canfor owns and operates 13 sawmills in British Columbia, one in Alberta, one in Quebec, and 4 in the Carolinas. As of December 31, 2008, these mills had an annual capacity of 4.9 billion board feet of lumber.  Canfor reduced its solid wood production levels during 2008 to reflect the singicantly lower levels od demand, indefinitely shutting down its Chetwynd and Mackenzie sawmills and reducing shifts and operating shortened work at weeks at certain points of its other operations.  In addition to its sawmills, Canfor's operations also include two lumber manufacturing facilities, one in British Columbia and one in Washington State, a while-log chipping plant and a finger-joint ill in British Columbia, and in the Carolinas the operations include two lumber treating plants, a finger joint plant, and trucking division.  Canfor also holds a 60% interest in Houston Pellet Inc., which has an annual capacity of 150,000 tonnes of wood pellets. 
Pulp and Paper Sales (36% of 2008 Revenue) In 2006, Canfor completed the separation of its pulp and paper business, Canfor Pulp LP, from its wood business. Canfor retains a 50.2% share of of the Canfor Pulp LP, which operates as a separate business with separate management. While Canfor Pulp LP has become a separate entity, Canfor has held 100% control the Taylor Pulp Mill.  Canfor Pulp LP owns and operates three mills with annual capacity to produce over one million tonnes of softwood kraft pulp. Of that one million tonnes, 90% is bleached for sale in the market, and the following 10% is converted into kraft paper for sale. 
Panels (6.5% of 2008 Revenue) The Panel segments include the Tackama plywood plant and the PolarBoard OSB facility with a combined annual production capacity of 910 million square feet (3/8" basis). Both these plants were closed indefinitely in order to cut costs and production in response to a severe lack of demand.  Canfor also has 50% share of the Peace Valley OSB mill in Fort St. John, British Columbia, which is jointly owned with the Louisiana-Pacific Canada Ltd.  The mill has an annual production capacity of 820 million million square feet (3/8" basis). Most of the production is Performance Rated Sheath and flooring, used in wall, roof, and flooring construction of new homes and in repair and remodeling projects. 
Canfor facing large scale net losses before tax and interest of $529 million and $463 million in 2007 and 2008 respectively, the focus of the company has become to be conservative. In order to cutdown on expenses and responding to a decrease in demand, Canfor has shutdown multiple mills including its Mackenzie Mill on June 11, 2008. In places like California and Florida, the number of new homes built has dropped 40% from the year before.  Canfor has cut its manufacturing and production costs by 24%, from 2.5 billion in 2007 to 1.9 billion in 2008.  While the losses have been significant, Canfor possesses a strong balance sheet with $365 million in cash and cash equivalents and an approximately 1 to 1 debt to equity ratio.  In a sign of optimism, on May 1st, 2009 Canfor announced the Mackenzie mill will reopen.  This move will return Canfor closer to its production levels prior to the real estate crisis.
Canfor's operations are subject to environmental regulation by federal, provincial, state and local authority. Canfor has incurred and will continue to incur, capital expenditures and operating costs to comply with environmental laws and regulations. No assurance can be given that changes in these laws and regulations or their application will not have a material adverse effect on Canfor's business, operations, financial condition and operational results. 
Prices for lumber and panels in 2007 and 2008 have reached historically low levels, which has resulted in significant operating losses and asset impairments incurred by the Company in those years.  The historically low levels can be attributed to a lack of demand due to the collapse of the real estate market. As the price of lumber and panels drop, it cuts directly into Canfor's profit. Their operating expenses remain the same, but their operating revenues drop as customers pay less for the wood, resulting in the large decrease in revenues.
Canfor faces major competition from several other North American Lumbering companies. West Fraser and Weyerhauser, like Canfor, have historically been successful but have faced turbulent times in light of the real estate crisis.
Weyerhauser is a diverse company that focuses not only on lumber but also does business in real estate. The combination of the lumber and real estate markets have put heavy losses on Weyerhauser 
West Fraser is very similar to Canfor in that its a British Columbia lumbering company whose 3 major business segments include Lumber, Pulp and Paper, and Panels. West Fraser has also faced many of the tough financial problems Canfor has faced.  While the table below denotes that West Fraser has more stable sales, it has also been experiencing increasing net loss. Contrary, Canfor has been able to decrease its net loss from 2007 to 2008.
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|West Fraser Sales|
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