Canfor (CFP) investor relations material

Executive summary

• Q4 2025 saw a consolidated reported operating loss of $415.9 million and net loss of $390.5 million ($3.35/share), driven by significant asset write-downs and impairments totaling $320.4 million across lumber and pulp segments.

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

• Strategic transformation included closing nine high-cost sawmills since 2023 and investing in new US South and Swedish facilities to diversify assets and improve cost competitiveness.

• Challenging North American lumber markets, elevated US duties, and weak global pulp prices weighed heavily on results, with only slight late-quarter price improvements due to curtailments and low inventories.

• Benefits from strategic actions are emerging, supporting resilience amid market uncertainty.

Financial highlights

• Q4 2025 sales were $1,282.3 million, nearly flat compared to Q3 2025 ($1,259.8 million), with a reported operating loss of $415.9 million.

• Asset write-downs and impairment charges 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.

• Lumber business posted an adjusted EBITDA loss of CAD 8 million in Q4, down CAD 6 million from the prior quarter, reflecting weak market conditions and lower sales in Canada due to new tariffs.

• Canfor Pulp reported an adjusted EBITDA loss of CAD 17 million in Q4, CAD 14 million lower than the prior quarter, impacted by weak global markets and scheduled maintenance.

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

Outlook and guidance

• North American lumber markets are expected to remain uncertain and volatile through 2026, with subdued demand and ongoing high US duties and tariffs.

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

• Global softwood kraft pulp market conditions anticipated to remain weak into 2026, with ongoing economic uncertainty and high inventories.

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

• CPPI may not comply with financial covenants at March 31, 2026, and is pursuing mitigation initiatives and a proposed transaction with Canfor Corporation.