Canfor Corporation (TSX:CFP) presented its third quarter 2025 financial results on November 6, revealing continued challenges across both its lumber and pulp segments. The company reported a shareholder net loss of $172.4 million ($1.48 per share), which significantly missed analyst expectations of -$0.678 per share despite revenue exceeding forecasts. Following the earnings announcement, Canfor's stock price declined by 0.82% to $12.07, reflecting investor concerns about the company's performance amid persistent market headwinds.
The presentation, delivered by CFO Pat Elliott, highlighted the ongoing difficulties in global lumber and pulp markets, with adjusted operating losses before one-time items worsening compared to the previous quarter. The results were further impacted by a significant $77.2 million duty expense related to finalized rates from the sixth period of review (POR6) by the U.S. Department of Commerce.
Quarterly Performance Highlights
Canfor's Q3 2025 financial performance showed mixed results when compared to the previous quarter. While the reported operating loss improved to $208.3 million from $251.4 million in Q2, the adjusted operating loss before one-time items deteriorated to $111.3 million from $44.0 million in the previous quarter.
Total sales decreased to $1,259.8 million in Q3 from $1,379.4 million in Q2, representing a decline of $119.6 million. This revenue figure, however, exceeded market expectations of $1.22 billion, representing a positive surprise of 3.28%.
As shown in the following comparison of Q3 earnings metrics:
The company's adjusted net loss (excluding non-operating items) increased to $171.2 million ($1.47 per share) in Q3 from $67.0 million ($0.56 per share) in Q2. This represents a significant deterioration in underlying performance despite the improvement in reported figures, which were affected by substantial one-time items in the previous quarter.
Detailed Financial Analysis
Lumber Segment Performance
Canfor's lumber segment reported an operating loss of $182.2 million in Q3 2025, an improvement from the $229.2 million loss in Q2. However, when excluding adjusting and one-time items, the lumber operating loss worsened to $90.1 million from $24.7 million in the previous quarter.
The segment faced continued pricing challenges, particularly in the U.S. South, where SYP East 2x4 #2 lumber prices dropped to $373 per thousand board feet from $481 in Q2. Western SPF prices remained relatively stable at $657 CDN, compared to $651 CDN in the previous quarter.
The following slide details the lumber segment's performance metrics:
On an adjusted basis, before amortization and one-time items, the lumber segment recorded an operating loss of $2.0 million in Q3, a significant decline from the $68.3 million operating income in Q2. This deterioration reflects the sustained pressure on the global lumber market across all regions, despite relatively stable Western SPF pricing.
Pulp Segment Performance
Canfor Pulp Products Inc. also faced challenges in Q3, with the pulp segment reporting an operating loss of $16.0 million, compared to a $5.3 million loss in Q2. After adjustments, the operating loss was $11.1 million, worsening from $2.4 million in the previous quarter.
The following slide illustrates the pulp segment's performance:
Global softwood pulp market fundamentals remained at depressed levels during the quarter, with the average NBSK pulp list price delivered to China at $620 USD per tonne, unchanged from Q2. Production volumes were 176,000 tonnes, slightly down from 179,000 tonnes in the previous quarter, while shipment volumes decreased to 178,000 tonnes from 187,000 tonnes.
Duty Impact and Regulatory Environment
A significant factor affecting Canfor's Q3 results was the impact of countervailing and anti-dumping duties on Canadian lumber exports to the United States. The company recorded a duty expense of $99.4 million in Q3, a substantial increase from $18.6 million in Q2, primarily due to a $77.2 million expense related to the finalization of POR6 rates.
The following slide details the duty impact:
The U.S. Department of Commerce announced final results for the sixth period of review (POR6) in August and September 2025, with Canfor's final combined CVD and ADD rate set at 10.21%. The company has paid total cumulative cash deposits of $1,070.7 million as of September 30, 2025, with no refunds expected until litigation is settled.
Forward-Looking Statements
Looking ahead, Canfor anticipates continued economic uncertainty but expects market rebalancing in 2026, according to statements made during the earnings call. The company is focusing on operational efficiency and cost management to navigate the challenging market environment.
As detailed in the adjusting and one-time items summary:
Canfor has taken steps to address inventory valuation, with inventory write-downs of $19.8 million in Q3, up from $12.1 million in Q2. This reflects the company's efforts to align its inventory valuation with current market conditions.
During the earnings call, CEO Susan Yurkovich emphasized the company's focus on controllable factors and its financial flexibility to withstand current market conditions. The company has also made strategic moves, including the acquisition of three sawmills in Sweden for $171 million CAD, aiming to strengthen its competitive position in the European market.
Despite the challenging quarter, Canfor's management remains focused on navigating market volatility through operational flexibility across its North American and European assets. The company's high-quality fiber assets, particularly in Sweden, are expected to provide some resilience as it works toward market rebalancing in the coming year.
Full presentation:
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