Lower Lumber Prices and Rising Interest Rates Constrain West Fraser's Growth in Third Quarter

West Fraser reported third-quarter results that were largely in-line with our expectations. While wood product companies have enjoyed record lumber prices and sky-high demand over the last few years, the party is coming to an abrupt, but expected, end. Softening housing demand in the United States and falling lumber prices in the third quarter led to a steep decline in West Fraser’s financial results. Net sales decreased almost 12% year over year (down 27% sequentially) while consolidated operating margins fell over 1,300 basis points to 13.5%, the lowest level since the second quarter of 2020.