Canfor reports results for the second quarter of 2025.
Overview.
Q2 2025 operating loss of $251 million, shareholder net loss of $203 million, or $1.71 per share.
After taking into consideration adjusting items 1 of $201 million, Q2 2025 operating loss of $51 million, compared to a similarly adjusted operating loss of $32 million in Q1 2025.
Solid earnings from Europe; North American operations impacted by sustained weakness in lumber benchmark pricing.
Persistent weak market conditions in the US South led to the announcement of the permanent closure of the Company's Estill and Darlington sawmills, and, as a result, an asset write-down and impairment charge of $189 million and restructuring costs of $7 million in the lumber segment.
Rising global economic uncertainty put downward pressure on global pulp market fundamentals, particularly in China, and on North American kraft paper markets; global pulp producer inventories climbed to well above the balanced range.
The Canadian dollar strengthened by 3 cents, or 4%, versus the US-dollar quarter-over-quarter, weakening revenues.
Vida AB announced agreement to purchase AB Karl Hedin Sågverk ("Hedin") for $164 million, including approximately $39 million of working capital, which will add 230 million board feet to Vida's annual capacity.
Financial results.
The following table summarizes selected financial information for the Company for the comparative periods:
(millions of Canadian dollars, except per share amounts)
Q2 2025
Q1 2025
YTD 2025
Q2 2024
YTD 2024
Sales
$
1,379.4
$
1,417.5
$
2,796.9
$
1,381.5
$
2,764.2
Reported operating income (loss) before amortization, asset write-downs and impairments
$
39.6
$
72.6
$
112.2
$
(98.3)
$
(78.5)
Reported operating loss
$
(251.4)
$
(28.5)
$
(279.9)
$
(250.8)
$
(336.6)
Adjusted operating income (loss) before amortization, asset write-downs and impairments 1
$
51.7
$
68.9
$
120.6
$
(46.9)
$
(57.3)
Adjusted operating loss 1
$
(50.7)
$
(32.2)
$
(82.9)
$
(167.8)
$
(283.8)
Net loss 2
$
(202.8)
$
(31.0)
$
(233.8)
$
(191.1)
$
(255.6)
Net loss per share, basic and diluted 2
$
(1.71)
$
(0.26)
$
(1.97)
$
(1.61)
$
(2.15)
Adjusted net loss 1, 2
$
(67.0)
$
(38.1)
$
(105.1)
$
(168.7)
$
(220.8)
Adjusted net loss per share, basic and diluted 1, 2
$
(0.56)
$
(0.32)
$
(0.88)
$
(1.42)
$
(1.86)
1. Adjusted results referenced throughout this news release are defined as non-IFRS financial measures. For further details, refer to the "Non-IFRS financial measures" section of
this document.
2. Attributable to equity shareholders of the Company.
The Company reported an operating loss of $251.4 million for the second quarter of 2025, compared to an operating loss of $28.5 million in the first quarter of 2025. After accounting for adjusting items totaling $200.7 million, consisting of an inventory write-down as well as an asset write-down and impairment charge, the Company's operating loss was $50.7 million for the current quarter. This compares to a similarly adjusted operating loss of $32.2 million in the prior quarter. These results reflect a decline in results for both the lumber and pulp and paper segments.
Commenting on the Company's second quarter results, Canfor's President and Chief Executive Officer, Susan Yurkovich, stated: "While our European operations produced solid earnings this quarter, the North American market continued to experience significant challenges reflecting the impact of sluggish demand and a persistent weak pricing environment. During the second quarter, we made the difficult decision to permanently close our Estill and Darlington sawmills in South Carolina following an extended period of sustained financial losses. With punitive US softwood lumber duties combining with ongoing global economic and trade uncertainty, we remain focused on what we can control and will continue to leverage our globally diversified operating platform to combat these headwinds."
"For our pulp business" Yurkovich added, "our second quarter results were impacted by trade policy uncertainty between China and the US, which slowed pulp purchasing activity and gave rise to climbing pulp producer inventory levels and a declining US-dollar pulp pricing environment. We anticipate that these challenging conditions will persist well into the third quarter. Consistent with our approach in the lumber business, we are maintaining our focus on safety, reliability, productivity and disciplined cost management."
Second quarter lumber segment highlights.
For the lumber segment, the operating loss was $229.2 million for the second quarter of 2025, compared to the previous quarter's operating loss of $25.5 million. These results include adjusting items consisting of an asset write-down and impairment charge of $188.6 million and an inventory write-down of $9.2 million.
After taking into consideration these adjusting items, the lumber segment operating loss in the second quarter of 2025 was $31.4 million, compared to a similarly adjusted operating loss of $29.2 million in the prior quarter. These results reflect another period of solid earnings from the Company's European operations, largely tied to improved market pricing in that region and a 6% weaker Canadian dollar versus the Swedish Krona ("SEK"), tempered somewhat by log cost escalation in Europe. However, these earnings were overshadowed by challenging results from the Company's North American operations, primarily associated with ongoing weakness in North American lumber benchmark pricing.
In June 2025, the Company announced its decision to permanently close its Darlington and Estill sawmills in South Carolina, effective August 2025. The closures follow an extended period of persistently weak market conditions and sustained financial losses. As a result of this announcement, the Company recognized an asset write-down and impairment charge of $188.6 million, as well as restructuring costs of $6.7 million, during the second quarter of 2025.
North American housing markets experienced a moderate decline through the second quarter of 2025. Ongoing affordability concerns, combined with general economic and political uncertainty, especially relating to potential US tariffs, continued to dampen demand and slow market activity. These factors led to an increase in housing supply and a reduction in new home construction as well as repair and remodel activity, all of which exerted downward pressure on most North American lumber benchmark prices compared to the previous quarter.
In Japan, lumber demand and pricing strengthened as the second quarter progressed, driven largely by an increase in building activity in the current period following a surge in homebuying in the previous quarter ahead of building code changes. In contrast, lumber demand and prices in China remained under pressure throughout most of the second quarter, primarily due to elevated inventory levels in the region.
European lumber demand continued to face downward pressure through the second quarter of 2025, principally reflecting affordability challenges and muted consumer sentiment. However, some pressure on lumber inventory supply in the region led to a slight uplift in pricing quarter-over-quarter.
On July 22, 2025, the Company announced that its 77%-owned subsidiary, Vida AB, had entered into an agreement with Mattsbo Såg AB and certain minority shareholders to acquire AB Karl Hedin Sågverk ("Hedin") for a purchase price of $164 million (SEK 1.15 billion), which includes approximately $39 million in working capital. Hedin operates three sawmills in Central Sweden and specializes in the production of dimensional and specialty wood products. This acquisition is projected to increase Vida's annual production capacity by 230 million board feet, resulting in a total estimated capacity of 2.1 billion board feet following completion. The transaction is anticipated to close later in 2025, subject to customary closing conditions.
On July 25, 2025, the US Department of Commerce announced a final anti-dumping duty ("ADD") rate of 35.56% for the Company for the sixth period of review ("POR6"). When taking into consideration the preliminary countervailing duty ("CVD") rate of 11.87% for POR6 that was announced earlier in 2025, the total combined rate for POR6 is 47.43%. Upon finalization of both CVD and ADD for POR6 (anticipated in early August 2025), the Company anticipates recognizing an estimated expense of $88.3 million (US$64.6 million) in its interim consolidated financial statements for the third quarter of 2025.
Lumber segment outlook.
Looking ahead, North American lumber demand is anticipated to remain relatively weak through the third quarter of 2025. Ongoing uncertainty, affordability challenges as well as constrained consumer confidence and tariff-related concerns are projected to continue to weigh on near term demand and put downward pressure on prices early in the third quarter. However, a gradual price improvement is forecast later in the third quarter, particularly for Western SPF, as producers look to recover the higher duties that come into effect in August 2025.
In addition to the pre-existing CVD and ADD impacts on the Company, Canfor continues to monitor the trade situation between Canada and the US. With a diversified global operating platform, the Company is positioned to mitigate some of these costs, however, potential tariffs do present challenges for the Company's operations. As a result, the Company continues to focus on strengthening domestic markets and its presence in non-US markets.
In offshore markets, Japan is anticipated to experience a modest decrease in lumber prices through the third quarter of 2025, as the housing construction backlog eases. China lumber markets are anticipated to remain depressed.
In Europe, lumber markets are projected to see further pricing pressure in the third quarter of 2025, as persistent affordability challenges and cautious consumer behaviours are anticipated to keep demand muted. In addition, with lumber inventories being redirected from the Middle East North Africa region into the UK market, it is projected that ample lumber supply will keep prices in that region relatively subdued.
Second quarter pulp and paper segment highlights.
For the pulp and paper segment, the operating loss was $5.3 million for the second quarter of 2025, compared to operating income of $10.8 million for the first quarter of 2025. After adjusting for a $2.9 million inventory write-down in the current period, Canfor Pulp Product Inc.'s ("CPPI") operating loss was $2.4 million for the second quarter of 2025. These results were largely driven by a decline in both CPPI's average Northern Bleached Softwood Kraft ("NBSK") pulp and paper unit sales realizations in the current quarter and, to a lesser extent, an uplift in pulp unit manufacturing costs.
Global softwood pulp markets experienced downward pressure throughout the second quarter of 2025, primarily driven by weak demand from China, largely tied to the impact of new trade policies between China and the US, as well as general global economic uncertainty. As a result, US-dollar NBSK list prices to China, the world's largest pulp consumer, started the quarter at a high of US$798 per tonne, before declining steadily throughout the period, ending June at US$690 per tonne. For the current quarter overall, US-dollar NBSK pulp list prices to China averaged US$734 per tonne, down US$59 per tonne, or 7%, from the prior quarter. As a result of weak demand, global softwood pulp producer inventories climbed significantly through the second quarter of 2025 to well above the balanced range, ending May at 46 days of supply, an increase of 8 days compared to March 2025. Market conditions are generally considered balanced when inventories are in the 32-43 days of supply range.
Pulp and paper segment outlook.
Looking forward, global softwood kraft pulp market conditions are anticipated to remain weak throughout the third quarter of 2025 as purchasing activity, particularly from China, is forecast to be soft through the traditionally slower summer period, despite the announcement of market curtailments from some Nordic pulp producers. As a result, global pulp producer inventories are forecast to remain well above the balanced range through the third quarter of 2025.
CPPI continues to actively monitor developments in the trade relationship between Canada and the United States. In the event that tariffs are imposed on US pulp and paper shipments, CPPI has mitigation strategies intended to largely offset potential impacts.
A minor scheduled maintenance outage will take place during the third quarter of 2025 at CPPI's Intercontinental NBSK pulp mill and at its paper machine. This maintenance outage is projected to reduce both NBSK market pulp production and paper production by 2,000 tonnes each.
Additional information and conference call.
A conference call to discuss the second quarter's financial and operating results will be held on Friday, August 1, 2025, at 9:00 AM Pacific time. To participate in the call, please dial Toll-Free 1-888-510-2154. For instant replay access until August 15, 2025, please dial Toll-Free 1-888-660-6345 and enter participant pass code 18122#.
The conference call will be webcast live and will be available at www.canfor.com. This news release, the attached financial statements and a presentation used during the conference call can be accessed via the Company's website at www.canfor.com/investor-relations/webcasts.
Non-IFRS financial measures.
Throughout this press release, reference is made to certain non-IFRS financial measures which are used to evaluate the Company's performance but are not generally accepted under IFRS and may not be directly comparable with similarly titled measures used by other companies. The following table provides a reconciliation of these non-IFRS financial measures to figures reported in the Company's condensed consolidated interim financial statements:
Forward-looking statements.
Certain statements in this press release constitute "forward-looking statements" which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Words such as "expects", "anticipates", "projects", "intends", "plans", "will", "believes", "seeks", "estimates", "should", "may", "could", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on Management's current expectations and beliefs and actual events or results may differ materially. There are many factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements. Forward-looking statements are based on current expectations and Canfor assumes no obligation to update such information to reflect later events or developments, except as required by law.
About Canfor Corporation.
Canfor 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 produces renewable products from sustainably managed forests, at more than 50 facilities across its diversified operating platform in Canada, the United States and Europe. The Company has a 77% stake in Vida AB, Sweden's largest privately owned sawmill company and also owns a 54.8% interest in Canfor Pulp Products Inc. Canfor shares are traded on The Toronto Stock Exchange under the symbol CFP. For more information visit canfor.com.
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