Canfor Corporation reported a third-quarter 2026 operating loss of CAD 76.6 million and a net loss attributable to shareholders of CAD 88.2 million, or CAD 0.75 per share. Adjusted EBITDA was CAD 98.1 million, compared with CAD 119.6 million in Q2 and an adjusted EBITDA loss of CAD 13.7 million a year earlier.

Sales were CAD 1,284.8 million, versus CAD 1,526.4 million in Q2 and CAD 1,259.8 million in Q3 2025. Reported EBITDA was CAD 24.0 million, against CAD 100.8 million and a loss of CAD 110.7 million respectively. Q2 operating profit was CAD 4.8 million, while Q3 2025 recorded a CAD 208.3 million operating loss. Shareholder net losses in those periods were CAD 18.5 million and CAD 172.4 million, or CAD 0.16 and CAD 1.48 per share.

Pulp and paper performance
The pulp and paper segment recorded an operating loss of CAD 44.6 million, compared with CAD 23.1 million in Q2. After CAD 38.4 million in adjustments and one-time items, adjusted EBITDA was CAD 1.5 million, compared with a CAD 12.2 million loss in Q2. Paper EBITDA increased to CAD 10.5 million from CAD 8.0 million.

Higher pulp and paper production, following scheduled maintenance in the previous quarter, supported the improvement. Slightly lower US-dollar northern bleached softwood kraft pulp list prices in China partly offset that benefit. NBSK list prices to China averaged USD 645 per tonne, down USD 13, or 2%, from Q2.

Global softwood pulp demand remained subdued, with structural market changes and high producer inventories weighing on prices. Supply constraints moderated further declines. Producer inventories ended August at 46 days of supply, two days above June and near the upper end of the 39–47 day range generally considered balanced.

Kraft paper demand maintained its positive momentum. North American demand benefited from paper-based packaging growth, higher plastic raw material costs, substitution of plastic products and stronger food packaging demand.

Closures and adjusting items
The permanent closures of the Fox Creek sawmill in Alberta and Northwood NBSK pulp mill in Prince George, British Columbia, were announced during the quarter. Fox Creek wound down in September, while Northwood is expected to close by year-end.

Fox Creek generated CAD 31.8 million in asset write-downs and impairments and CAD 4.6 million in restructuring and closure costs. Northwood generated CAD 10.0 million in asset impairments and CAD 36.7 million in restructuring and closure costs.

Total adjusting and one-time items were CAD 74.1 million. A CAD 9.0 million inventory write-down reversal comprised CAD 0.7 million in lumber and CAD 8.3 million in pulp and paper. Adjusted operating loss was CAD 43.8 million, compared with Q2 profit of CAD 14.8 million and a Q3 2025 loss of CAD 188.5 million. Before one-time items, adjusted operating loss was CAD 2.5 million, versus Q2 profit of CAD 23.6 million and a CAD 111.3 million loss a year earlier. Amortization was CAD 100.6 million, versus CAD 96.0 million and CAD 97.6 million.

Q2 included CAD 13.7 million of impairments and CAD 8.8 million of closure costs for the Urshult and Orrefors sawmills in Europe. Its lumber inventory reversal of CAD 7.0 million was partly offset by a CAD 3.3 million pulp and paper inventory write-down. Q3 2025 included CAD 19.8 million of inventory write-downs, comprising CAD 14.9 million in lumber and CAD 4.9 million in pulp and paper, as well as CAD 77.2 million (USD 56.2 million) in duties following finalization of sixth-period review rates.

No equivalent final duty-rate adjustment was booked in Q3 2026. Seventh-period countervailing and anti-dumping rates were finalized after quarter-end, and CAD 45.9 million (USD 32.8 million) of expense will be recognized in Q4.

Lumber markets and acquisition
Lumber operating loss was CAD 19.9 million, compared with Q2 operating profit of CAD 41.2 million. After CAD 35.7 million in adjustments and one-time items, adjusted EBITDA was CAD 107.9 million, against CAD 144.7 million.

Results were relatively stable across operating regions. Lower European shipments, largely reflecting normal summer downtime, drove the sequential decline, partly offset by higher US South shipments and improved unit sales realizations in all regions. Canfor also completed the acquisition of PinkWood, expanding engineered wood products capacity.

In North America, high mortgage rates and political and economic uncertainty constrained demand. Customers purchased cautiously and held lean inventories. Benchmark prices declined modestly, although wider dimensions improved; repair and remodelling demand remained broadly steady.

Japanese prices were relatively stable, but weak domestic demand and substitution toward domestic species reduced softwood lumber imports. Weak residential construction and property markets continued to constrain Chinese demand.

Central European pricing was steady, while favourable weather and stronger demand supported Northern Europe. Subdued construction and ample supply weighed on UK prices. Middle East and North African demand and prices remained stable despite geopolitical tensions.

President and CEO Susan Yurkovich said relatively stable lumber earnings, improved pulp performance and another strong paper quarter supported results. She expected challenging markets to continue through year-end, with seasonal lumber weakness and pressure on global pulp. The closures form part of efforts to align the operating footprint with market conditions and improve resilience and competitiveness.

Nine-month results
January–September sales were CAD 4,170.3 million, versus CAD 4,056.7 million. Reported EBITDA was CAD 153.3 million, against a CAD 187.1 million loss, and the operating loss narrowed to CAD 144.3 million from CAD 488.2 million. Adjusted EBITDA increased to CAD 226.2 million from CAD 113.6 million. Adjusted operating loss was CAD 121.5 million, versus CAD 271.4 million, or CAD 71.4 million versus CAD 187.5 million before one-time items.

The shareholder net loss was CAD 178.8 million, or CAD 1.53 per share, compared with CAD 406.2 million, or CAD 3.45 per share. Nine-month amortization was CAD 297.6 million, versus CAD 301.1 million. Lumber impairments were CAD 45.5 million, versus CAD 188.6 million; pulp impairments were CAD 10.0 million, versus none; inventory reversals were CAD 32.7 million, versus CAD 28.2 million in write-downs. Lumber restructuring and closure costs were CAD 13.4 million, against CAD 6.7 million, while pulp closure costs were CAD 36.7 million, against none. The prior-year period included CAD 77.2 million in finalized duty expense.

Outlook
Softwood kraft pulp markets are expected to remain difficult through year-end as new capacity, soft demand and economic and geopolitical uncertainty constrain purchasing, keep inventories elevated and limit price recovery. Recent and possible further supply reductions may provide some relief. Bleached kraft paper demand is expected to remain stable globally and in North America, supported by packaging applications.

Q4 results will reflect Northwood’s closure and its effects on production, shipments and costs. No major maintenance outages are scheduled for the remainder of 2026.

North American lumber markets are expected to soften with seasonal construction slowing and weaker underlying demand. High mortgage rates, affordability constraints and cautious purchasing are expected to persist into 2027. Lower softwood lumber duty rates effective in mid-October should partly offset weaker Western SPF pricing.

Japanese demand and prices may improve as delayed projects progress and manufacturing accelerates, while Chinese demand is expected to remain subdued. European prices are expected to decline modestly, with UK pressure spreading into Central Europe; Northern Europe and Middle East and North African markets are expected to remain relatively stable.

Canfor’s non-IFRS measures are company-defined and may differ from similarly named measures elsewhere. Its outlook is subject to market and other risks. The results presentation and webcast replay are available through its investor materials, with replay access scheduled until January 5, 2027.

Headquartered in Vancouver, Canfor manufactures lumber, engineered wood, pulp, paper, pellets and green energy at more than 50 facilities in Canada, the United States and Europe. It owns 77% of Sweden’s Vida AB and trades on the Toronto Stock Exchange as CFP.
  
Source:  papnews.com