Canfor Pulp Products (TSE:CFX) and parent company Canfor reviewed fourth-quarter and full-year 2025 results on their latest analyst call, emphasizing ongoing pressure from weak global pulp and paper markets, lumber market volatility, and trade-related headwinds. Management also highlighted steps taken over the last several years to reshape Canfor’s operating footprint and improve competitiveness.
Management highlights strategic transformation and trade pressures
Canfor President and CEO Susan Yurkovich opened the call by describing what she called a “significant transformation” underway over the past several years. Yurkovich said the strategy is aimed at strengthening the operating platform to reduce the impact of elevated duties, diversify the asset base and product offering, and improve cost competitiveness.
While calling 2025 “another challenging year,” Yurkovich said the company is beginning to see benefits from these actions and believes Canfor is positioned to navigate near-term uncertainty with a diversified operating platform. She added that the company continues to view medium- to long-term lumber demand fundamentals as strong and said Canfor has maintained a strong balance sheet and flexibility to pursue strategic growth opportunities, while remaining “patient and disciplined.”
Pulp segment: weak markets, downtime, and liquidity focus
Stephen Mackie, Canfor’s Chief Operating Officer and CEO of Canfor Pulp, said Canfor Pulp continues to be impacted by weak global pulp and paper markets. He attributed the environment to ongoing trade disputes and broader economic uncertainty, which he said have contributed to elevated inventory levels and weak pricing through much of 2025 and into 2026.
Mackie said management is focused on targeted cost reductions and improving operating performance, noting progress on certain initiatives in recent months. However, he said weak market conditions continue to weigh on financial results and liquidity, and added that fourth-quarter results were further impacted by scheduled maintenance downtime at the Northwood facility.
He said the company is managing factors within its control through balance sheet management, preserving liquidity, and continually assessing its operating footprint based on cost structure, availability of economically viable fiber, and market demand.
Financial results: EBITDA losses in North America lumber and pulp; Europe impairment recorded
Chief Financial Officer Pat Elliott provided fourth-quarter financial highlights. Elliott said the lumber business generated an Adjusted EBITDA loss of CAD 8 million in the fourth quarter, which was CAD 6 million lower than the prior quarter. He said results reflected weak lumber market conditions, “particularly for Southern Yellow Pine,” and lower sales realizations in Canada following the introduction of Section 232 tariffs in the fourth quarter.
In Europe, Elliott said the European lumber business generated Adjusted EBITDA of CAD 42 million in 2025, but weak demand and elevated log costs contributed to losses in recent quarters. He said that given ongoing cost pressures in the region, the company recorded a $214 million asset write-down and impairment charge in the fourth quarter, which was excluded from Adjusted EBITDA.
Looking ahead, Elliott said the company has started to see improvements in its underlying cost structure in Sweden. He said European demand is expected to remain “relatively flat” in the first quarter, while “strained lumber supply across the region” is anticipated to support higher pricing heading into the second quarter.
For North America, Elliott said industry-wide downtime in December contributed to stronger lumber pricing early in the year, again highlighting Southern Yellow Pine. While he cautioned that near-term volatility is expected to persist, Elliott said Canfor’s lumber business is positioned to navigate current market dynamics following the transformation of its operating platform.
In pulp, Elliott said Canfor Pulp reported an Adjusted EBITDA loss of CAD 17 million in the fourth quarter, CAD 14 million lower than the prior quarter, reflecting weak global markets and scheduled maintenance at Northwood.
Balance sheet, capex outlook, and Canfor Pulp transaction update
Elliott said Canfor Pulp ended the quarter with net debt of CAD 104 million and CAD 40 million of available liquidity. For Canfor—excluding Canfor Pulp and a duty loan completed in 2024—Elliott said the company ended the fourth quarter with net debt of approximately CAD 226 million and available liquidity of CAD 1.2 billion.
For 2026, Elliott guided to capital spending of approximately CAD 175 million in the lumber business and CAD 35 million for Canfor Pulp, inclusive of capitalized maintenance. During the Q&A session, Elliott provided additional detail, saying about 40% of the capital budget is discretionary and the remainder is maintenance. He cited a rebuild at a sawmill Canfor bought in El Dorado, Arkansas, and described other “smaller, discrete projects.” Elliott said the company expects to proceed with the spend and that the balance sheet supports it, while also noting there is “always opportunity” to pull back if needed.
Elliott also noted that Canfor has entered into an agreement to acquire all of Canfor Pulp’s issued and outstanding shares not already owned by Canfor, with results of the shareholder vote expected later the same day as the call. He warned that following the write-down and impairment charge in the fourth quarter, it is “highly probable” Canfor Pulp will reach its financial covenants in the first quarter if the transaction is not successfully completed. He added that regardless of ownership structure, Canfor Pulp continues to review its underlying business to optimize operations and mitigate losses.
Analyst Q&A: duties pressure, pulp inventories, and market context
In response to an analyst question about whether distressed assets are becoming more available in North America, Yurkovich said elevated duties are a “big challenge” across the industry because the required payments are cash deposits. She said she had not taken an inventory of competitors’ positions but emphasized the pressure is broadly felt.
Elliott also addressed pulp inventory levels, saying softwood inventories are “well above” what he described as a balanced range. He said historical inventory levels have been in the high 30s to the mid-40s days at most, and indicated there is roughly a week’s worth of producer inventory “overhang” versus a 40-day balance assumption. Elliott quantified the overhang as about half a million tons in producers’ hands in a 25 million ton market.
The call ended after an attempted question from a second analyst was impacted by audio issues. Yurkovich closed by thanking participants and saying the company would see analysts next quarter.
About Canfor Pulp Products (TSE:CFX)
Canfor Pulp Products Inc produces and sells northern bleached softwood kraft pulp, or NBSK pulp and paper. The company also generates and sells electricity from biomass out of its pulp plants in Western Canada. The firm organizes itself into two segments based on product: pulp and paper. The pulp segment generates most of the revenue. Canfor Pulp’s NBSK pulp customers are typically manufacturers of tissue paper, specialty paper, and printing and writing paper. Most of Canfor Pulp’s revenue comes from Asia.
