Canfor (TSE:CFP) management used its fourth-quarter 2025 results call to outline ongoing pressure from weak lumber and pulp markets, the financial impact of trade actions and duties, and the company’s multi-year effort to reshape its operating footprint toward lower-cost, more diversified production.
Management highlights a multi-year transformation
President and CEO Susan Yurkovich said Canfor has been undergoing a “significant transformation” over the past several years, with a strategy aimed at strengthening its operating platform to reduce the impact of elevated duties, diversify its asset base and product offerings, and improve cost competitiveness.
Yurkovich characterized 2025 as another challenging year, but said the company has started to see benefits from the strategic actions. She added that despite near-term uncertainty, Canfor believes it is well-positioned given a “high-quality, globally diversified” operating platform. Looking ahead, she said the company continues to see medium- to long-term lumber demand fundamentals as strong and believes its improved asset base will allow it to capitalize when market dynamics strengthen.
Lumber segment results reflect weak markets and tariff impacts
Chief Financial Officer Pat Elliott said Canfor’s lumber business posted an adjusted EBITDA loss of CAD 8 million in the fourth quarter, which was CAD 6 million worse than the prior quarter. Elliott said the results reflected weak lumber market conditions, particularly for southern yellow pine, as well as lower Canadian sales realizations after the introduction of Section 232 tariffs during the quarter.
On the outlook, Elliott said industry-wide downtime in December contributed to stronger lumber pricing to start the year, particularly for southern yellow pine. He cautioned that near-term volatility is expected to persist but said the lumber business is “well-positioned” in the current environment given the transformation of the operating platform described by Yurkovich.
Europe sees impairments amid weak demand and high log costs
Elliott said Canfor’s European lumber business generated adjusted EBITDA of CAD 42 million in 2025, but weak demand and elevated log costs have contributed to losses in recent quarters. In response to ongoing cost pressures, the company recorded a CAD 214 million asset write-down and impairment charge in the fourth quarter, which Elliott said was excluded from adjusted EBITDA.
Looking ahead, Elliott said the company has started to see improvements in its underlying cost structure in Sweden. He said European demand is expected to remain relatively flat in the first quarter, while strained lumber supply across the region is anticipated to support higher pricing heading into the second quarter.
Canfor Pulp pressured by weak pricing, high inventories, and downtime
Canfor Pulp CEO Stephen Mackie said the pulp unit continues to be affected by weak global pulp and paper markets, with trade disputes and broader economic uncertainty contributing to elevated inventory levels and weak pricing through much of 2025 and continuing into 2026. He said the company is focused on targeted cost reductions and improving operating performance, noting some progress in recent months, but added that weak market conditions continue to weigh on financial results and liquidity.
Mackie said fourth-quarter results were further affected by scheduled maintenance downtime at Northwood. He also said that, notwithstanding a pending transaction, management remains focused on managing what it can control, including balance sheet management, preserving liquidity, and continually assessing the operating footprint based on cost structure, the availability of economically viable fiber, and market demand.
Elliott said Canfor Pulp posted an adjusted EBITDA loss of CAD 17 million in the fourth quarter, CAD 14 million worse than the prior quarter, reflecting weak markets and the scheduled maintenance at Northwood. He said Canfor Pulp ended the quarter with net debt of CAD 104 million and CAD 40 million of available liquidity.
During the question-and-answer session, Elliott provided additional context on industry inventories, saying softwood pulp inventories are above a balanced range. He said the historical range has been in the “high 30s to mid-40s at most,” and described current conditions as roughly “about a week’s worth of inventory overhang” in producers’ hands, adding that in a 25 million ton market that equates to about half a million tons.
Capital spending plans and balance sheet position
Elliott said that for 2026 the company anticipates capital spending of approximately CAD 175 million in the lumber business and CAD 35 million for Canfor Pulp, inclusive of capitalized maintenance. In response to an analyst question, Elliott said roughly 40% of the budget is discretionary, with the remainder considered maintenance spending. He cited a rebuild at the sawmill the company bought in El Dorado, Arkansas, and referenced additional smaller projects. He added that while there is always an opportunity to pull back, the company is committed to proceeding, supported by the balance sheet and the strategic rationale tied to synergies with another facility in the region.
On liquidity, Elliott said Canfor—excluding Canfor Pulp and the duty loan completed in 2024—ended the fourth quarter with net debt of approximately CAD 226 million and available liquidity of CAD 1.2 billion.
Elliott also said Canfor has entered an agreement to acquire all of Canfor Pulp’s issued and outstanding shares not already owned by Canfor, with results of the shareholder vote expected later in the day. He added that following the fourth-quarter write-down and impairment charge, it is “highly probable” Canfor Pulp would reach its financial covenants in the first quarter absent a successful transaction with Canfor. He said that regardless of ownership structure, Canfor Pulp continues to review its underlying business as it seeks to optimize operations and mitigate financial losses.
The call concluded after one analyst was unable to be heard while attempting to ask questions. Management said it would see investors next quarter.
About Canfor (TSE:CFP)
Canfor Corp is a global leader in the manufacturing of high-value low-carbon forest products including dimension and specialty lumber, engineered wood products, pulp and paper, wood pellets and green energy. Proudly headquartered in Vancouver, British Columbia, Canfor Corp produces renewable products from sustainably managed forests, at more than 50 facilities across its diversified operating platform in Canada, the United States and Europe. Canfor Corp has a 77% stake in Vida AB, Sweden’s largest privately owned sawmill company and also owns, approximately, a 54.8% interest in Canfor Pulp.
