Canfor eyes acquisitions amid new U.S. duties

Canfor Corp., one of the world’s largest forestry companies, sees potential acquisition opportunities in the carnage left by new U.S. softwood lumber duties that could hit Canadian small- and medium-sized mills especially hard.

“We’ve got an appetite for (mergers and acquisitions),” Canfor CEO Don Kayne said on a conference call Thursday to discuss the company’s slightly betterthan-expected first-quarter results. “Clearly now with the valuations and so forth, we’re closely watching the market … so we’re just evaluating all those opportunities that may come up on an individual basis.”

The Vancouver-based firm reported Wednesday first-quarter net income of $66.1 million, or 50 cents per share, more than doubling the $26 million, or 20 cents per share, it reported in the first quarter of 2016.

However, its quarterly results were overshadowed by news this week that it has been slapped with a 20.26 per cent countervailing duty on softwood lumber by the U.S. government, as part of the latest escalation of an ongoing dispute over what U.S. producers believe to be unfair subsidies for their Canadian competitors.

While some of Canada’s biggest companies, including Canfor, were called out by name, the rest of the industry was hit with a 19.88 per cent duty. Canfor and its large peers, including West Fraser Timber Co. Ltd., Resolute Forest Products Inc., and Tolko Industries Ltd. are exempt from paying the duties retroactively on all shipments since Feb. 1 that others are forced to fork out.

Canfor was chosen as a “mandatory respondent” to U.S. investigations into duties in November and expects legal bills related to fighting the tariffs will subside for the rest of the year.