Canfor reports results for the second quarter of 2025.

Executive Summary

• Canfor reported a Q2 2025 operating loss of $251.4 million (net loss of $202.8 million, or $1.71 per share), driven by significant asset write-downs, impairments, and inventory write-downs totaling $200.7 million.
• The company announced the permanent closure of its Estill and Darlington sawmills in South Carolina due to sustained financial losses and weak market conditions, resulting in an $188.6 million impairment charge and $6.7 million in restructuring costs.
• Canfor’s 77%-owned subsidiary, Vida AB, agreed to acquire AB Karl Hedin Sågverk for $164 million, which will add 230 million board feet to Vida's annual capacity.

Key Details

• Financial Performance (Q2 2025):
  • Reported operating loss: $251.4 million (vs. $28.5 million loss in Q1 2025).
  • Adjusted operating loss: $50.7 million (vs. $32.2 million loss in Q1 2025).
  • Net loss: $202.8 million ($1.71 per share).
  • Adjusted net loss: $67.0 million ($0.56 per share).
  • Sales: $1,379.4 million (vs. $1,417.5 million in Q1 2025).
• Lumber Segment:
  • Reported operating loss: $229.2 million.
  • Adjusted operating loss: $31.4 million.
  • Adjusting items included an asset write-down/impairment of $188.6 million and an inventory write-down of $9.2 million.
  • Sawmill Closures: Estill and Darlington sawmills in South Carolina permanently closed effective August 2025.
  • US Tariffs: US Department of Commerce announced a final anti-dumping duty (ADD) rate of 35.56% and a countervailing duty (CVD) rate of 11.87%, resulting in a combined rate of 47.43%. Canfor anticipates an estimated expense of $88.3 million (US$64.6 million) in Q3 2025.
  • Market Conditions: North American demand weakened due to affordability concerns and tariff uncertainty. Japan demand strengthened; China demand remained under pressure. European pricing saw slight uplifts despite affordability challenges.
• Pulp and Paper Segment:
  • Reported operating loss: $5.3 million (vs. operating income of $10.8 million in Q1 2025).
  • Adjusted operating loss: $2.4 million (after a $2.9 million inventory write-down).
  • Market Conditions: Global softwood pulp markets weakened due to weak demand from China and trade policy uncertainty. US-dollar NBSK list prices to China averaged $734/tonne, down 7% from Q1. Global producer inventories rose to 46 days of supply (above the balanced 32-43 day range).
  • Maintenance: A minor scheduled maintenance outage in Q3 2025 will reduce NBSK market pulp and paper production by 2,000 tonnes each.
• M&A Activity:
  • Vida AB (77% owned by Canfor) entered an agreement to acquire AB Karl Hedin Sågverk ("Hedin") for $164 million (including ~$39 million working capital).
  • Hedin operates three sawmills in Central Sweden. The acquisition adds 230 million board feet to Vida's capacity, bringing total estimated capacity to 2.1 billion board feet.
  • Transaction anticipated to close later in 2025, subject to customary conditions.
• Outlook:
  • North American lumber demand expected to remain weak through Q3 2025, with gradual price improvement forecast later in the quarter.
  • Global pulp market conditions expected to remain weak through Q3 2025.

Notable Quotes

• Susan Yurkovich, President and CEO: "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."
• Susan Yurkovich, President and CEO: "For our pulp business... 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."