Canfor (CFP) investor relations material

Executive summary

• Q4 2025 reported an operating loss of $415.9 million and net loss of $390.5 million ($3.35/share), driven by significant asset write-downs and impairment charges totaling $320.4 million, mainly in lumber and pulp segments.

• Adjusted operating loss for Q4 2025 was $145.0 million, higher than Q3 2025's $111.3 million, reflecting continued weakness in both lumber and pulp markets.

• North American lumber markets remained pressured by elevated US duties and tariffs, with only modest late-quarter price improvements due to supply curtailments.

• Pulp segment performance was negatively impacted by weak global demand, high inventories, and limited access to economic fibre in British Columbia.

• Strategic transformation included closing high-cost sawmills, investing in new U.S. South and Swedish facilities, and maintaining a strong balance sheet for flexibility.

Financial highlights

• Q4 2025 sales were $1,282.3 million, nearly flat year-over-year and sequentially.

• Asset write-downs and impairments in Q4 2025 included $213.9 million for lumber and $106.5 million for pulp and paper, with a $52.5 million deferred tax asset write-off.

• Adjusted consolidated operating loss (before one-time items) was $145.0 million, up from $111.3 million in Q3.

• Cumulative cash deposits for countervailing and anti-dumping duties reached $1,110.7 million by year-end.

• Canfor Pulp ended Q4 with net debt of CAD 104 million and CAD 40 million in available liquidity; Canfor (excluding Pulp) had net debt of CAD 226 million and liquidity of CAD 1.2 billion.

Outlook and guidance

• North American lumber markets expected to remain volatile and subdued through at least H1 2026 due to ongoing trade issues, high duty rates, and macroeconomic uncertainty.

• Offshore lumber demand in Asia forecast to stay weak, with Japan and China facing continued demand softness.

• European lumber demand and pricing projected to remain flat in Q1 2026, with slight improvements possible in Q2 due to constrained supply.

• Global softwood kraft pulp market conditions anticipated to remain weak into 2026, with CPPI at risk of covenant non-compliance in Q1 2026.

• 2026 capital spend guidance: CAD 175 million for Lumber, CAD 35 million for Pulp, with about 40% discretionary and the rest for maintenance.