Canfor Pulp Products (CFX) investor relations material

Executive summary

• Q2 2026 saw a return to operating profitability with $4.8 million operating income and adjusted operating income of $23.6 million, reversing significant Q1 losses, driven by strong lumber segment performance and improved cost structure.

• Net loss attributable to shareholders was $18.5 million ($0.16 per share), a substantial improvement from Q1 2026's $72.1 million loss.

• Permanent closures of Urshult and Orrefors sawmills in Sweden, Fox Creek sawmill in Alberta, and Northwood NBSK pulp mill in BC were announced to optimize the asset base.

• Acquisition of PinkWood Ltd. was completed, adding 46 million linear feet of annual I-joist capacity and diversifying earnings.

• Results were offset by continued weakness in pulp and paper markets.

Financial highlights

• Q2 2026 sales were $1,526.4 million, up 12% sequentially and 11% year-over-year.

• Adjusted operating income was $23.6 million, compared to a $92.5 million adjusted loss in Q1 2026 and a $44.0 million adjusted loss in Q2 2025.

• Lumber segment adjusted operating income was $56.7 million, up from a $63.7 million loss in Q1 2026.

• Pulp and paper segment posted an adjusted operating loss of $19.8 million, reflecting lower shipments and a 17% production decline due to maintenance outages.

• Cash from operating activities was $209.9 million, up from $63.8 million in Q2 2025.

Outlook and guidance

• North American lumber markets expected to remain solid early in Q3 2026 but may moderate later due to affordability and macroeconomic uncertainty.

• Offshore Asian lumber demand projected to remain weak; European markets expected to be balanced with steady demand.

• Global softwood kraft pulp markets anticipated to stay under pressure in Q3 2026 due to new capacity and subdued demand.

• No major maintenance outages scheduled for pulp mills or paper machines for the rest of 2026.

• Anticipated restructuring costs of approximately CAD 30 million in Q3 for Northwood closure and CAD 35 million in asset write-downs for Fox Creek sawmill.