VANCOUVER, BC (News release) -- Canfor Corporation reported its first quarter of 2025 results:
-
Q1 2025 operating loss of $29 million; shareholder net loss of $31 million, or $0.26 per share.
-
Increase in North American lumber prices through Q1 2025 driven largely by supply constraints amid rising global economic and trade uncertainty; improved results from Western Canada following rationalization in 2024, combined with another quarter of solid earnings from Europe.
-
Improved results for Canfor Pulp as global softwood pulp market fundamentals saw modest improvement early in the quarter.
Financial results.
The following table summarizes select financial information for the Company for the comparative periods:
|
(millions of Canadian dollars, except per share amounts) |
|
Q1 2025 |
Q4 2024 |
Q1 2024 |
|||||
|
Sales |
$ |
1,417.5 |
$ |
1,285.7 |
$ |
1,382.7 |
|||
|
Reported operating income before amortization |
$ |
72.6 |
$ |
52.7 |
$ |
19.8 |
|||
|
Reported operating loss |
$ |
(28.5) |
$ |
(45.9) |
$ |
(85.8) |
|||
|
Adjusted operating income (loss) before amortization1 |
$ |
68.9 |
$ |
16.6 |
$ |
(10.4) |
|||
|
Adjusted operating loss1 |
$ |
(32.2) |
$ |
(82.0) |
$ |
(116.0) |
|||
|
Net loss2 |
$ |
(31.0) |
$ |
(63.3) |
$ |
(64.5) |
|||
|
Net loss per share, basic and diluted2 |
$ |
(0.26) |
$ |
(0.53) |
$ |
(0.54) |
|||
|
Adjusted net loss1, 2 |
$ |
(38.1) |
$ |
(39.9) |
$ |
(52.1) |
|||
|
Adjusted net loss per share, basic and diluted1, 2 |
$ |
(0.32) |
$ |
(0.33) |
$ |
(0.44) |
|||
|
|
|
||||||||
|
1. Adjusted results referenced throughout this news release are defined as non-IFRS financial measures. For further details, refer to the "Non-IFRS Financial Measures" section of this document. 2. Attributable to equity shareholders of the Company. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
The Company reported an operating loss of $28.5 million for the first quarter of 2025, compared to an operating loss of $45.9 million in the fourth quarter of 2024. After taking into consideration a $3.7 million reversal of a previously recognized inventory write-down, the Company's adjusted operating loss was $32.2 million for the first quarter of 2025, compared to a similarly adjusted operating loss of $82.0 million for the fourth quarter of 2024. These results largely reflected improved lumber segment results and, to a lesser extent, the pulp and paper segment.
Commenting on the Company's first quarter of 2025 results, Canfor's President and Chief Executive Officer, Susan Yurkovich said, "While improved North American lumber benchmark prices provided some relief this quarter, rising global economic and trade uncertainty, in addition to the already punitive US softwood lumber duties, create a challenging backdrop and a period of significant uncertainty for our lumber business. Through our diversified operating platform in Canada, the US South and Europe, we are positioned to mitigate these challenges, while remaining focused on what we can control, including operating safely and efficiently, working with our customers, and continuing to be flexible and responsive.
"For our pulp business" Yurkovich added, "this was another solid quarter with improved results and a strong operational performance. However, global economic uncertainty is also putting pressure on global softwood pulp markets in the near term."
First quarter lumber segment highlights.
For the lumber segment, the operating loss was $25.5 million for the first quarter of 2025, compared to the previous quarter's operating loss of $36.6 million. After taking into consideration the aforementioned inventory adjustment, the Company's lumber segment adjusted operating loss was $29.2 million for the first quarter of 2025, compared to a similarly adjusted operating loss of $72.7 million for the fourth quarter of 2024.
Overall, North American lumber markets experienced a modest improvement in the first quarter of 2025. Despite solid underlying long-term fundamentals, affordability challenges and economic and political instability, driven primarily by concerns over potential US tariffs, continued to weigh on demand in the current period. Reduced supply from mill closures and market-related curtailments in Western Canada, coupled with weather-related disruptions in the US South, however, led to an increase in most North American lumber benchmark prices quarter-over-quarter.
In Japan, improved demand in the multi-family rental and non-residential segments through the first quarter of 2025 was combined with fewer imports into the region, which led to an uptick in pricing in the current period. In contrast, demand in China remained muted throughout the current quarter, as the real estate market continued to face difficulties despite the government's ongoing efforts to stimulate the economy. These demand factors were met with lower supply and resulted in relatively flat and subdued pricing in the region quarter-over-quarter.
European lumber pricing experienced a moderate improvement through the first quarter of 2025, principally reflecting ongoing log supply constraints and high log prices, which lowered lumber inventories in the region and gave rise to pricing pressure in the current period.
Lumber segment outlook.
Looking ahead, North American lumber markets are anticipated to experience continued volatility and uncertainty throughout the second quarter of 2025. Ongoing affordability challenges and tariff-related disruptions to traditional trade flows are projected to result in tepid demand in the near term.
In addition to the pre-existing countervailing and anti-dumping duty impacts on the Company, Canfor continues to monitor the trade situation between Canada and the US. With a diversified global operating platform, the Company is positioned to mitigate some of these costs. However, potential tariffs do present challenges for the Company's Canadian operations. As a result, the Company is continuing to focus on domestic markets, as well as strengthening its presence in non-US markets.
In Japan, lumber demand and pricing are anticipated to continue to improve through the second quarter of 2025 as a result of ongoing strength in the multi-family rental and non-residential sectors, coupled with relatively lean inventory levels in the region. In China, the subdued market conditions experienced in the first quarter of 2025 are forecast to continue through the second quarter.
In Europe, lumber supply is projected to remain under pressure in the second quarter of 2025 as a result of ongoing log supply constraints and persistently high log prices in the region. This constrained lumber supply, when combined with an anticipated slight improvement in affordability, is forecast to result in an uplift in European lumber prices in the second quarter.
First quarter pulp and paper segment highlights.
For the pulp and paper segment, operating income was $10.8 million for the first quarter of 2025, compared to $4.1 million for the fourth quarter of 2024. These results were largely driven by a modest uplift in Canfor Pulp Product Inc.'s ("CPPI") average Northern Bleached Softwood Kraft ("NBSK") pulp unit sales realizations in the current quarter combined with a 6% increase in pulp production compared to the fourth quarter of 2024.
Global softwood pulp market fundamentals experienced some positive improvement during the first quarter of 2025, with modest strength observed early in the quarter, particularly in China, as global pulp producer inventory levels began to stabilize. As the quarter progressed, however, this momentum diminished as global economic and trade uncertainty rose. As a result, US-dollar NBSK list prices to China, the world's largest pulp consumer, started the year at US$770 per tonne and saw a modest increase through the current period, ending March at US$798 per tonne. For the current quarter overall, US-dollar NBSK pulp list prices to China averaged US$793 per tonne, up US$26 per tonne, or 3%, from the prior quarter.
Pulp and paper segment outlook.
While global pulp demand and pulp producer inventory levels are currently stable, looking ahead, global softwood pulp markets are anticipated to remain subdued as increasing uncertainty associated with economic concerns and potential trade disruptions weigh on market conditions.
Like Canfor, CPPI continues to monitor the trade situation between Canada and the US and is prepared with mitigation plans to mostly offset the impact should tariffs on US shipments be imposed. CPPI is also monitoring the broader global trade situation. With its high quality, specialty product offering and market diversification, CPPI is positioned to respond to any potential tariffs.
In addition, CPPI will continue to evaluate operating conditions and adjust operating rates at its pulp mills to align with economically viable fibre supply. These factors could also affect CPPI's operating plan, liquidity, cash flows and the valuation of long-lived assets.
Looking forward, CPPI has revised its maintenance schedule for the second half of 2025. A maintenance outage is now scheduled in the third quarter of 2025 at CPPI's Intercon Pulp mill and at its Paper machine. This maintenance outage is projected to reduce both NBSK market pulp production and paper production by 2,000 tonnes each. In the fourth quarter of 2025, a maintenance outage is now scheduled at CPPI's Northwood Pulp mill which is projected to reduce NBSK market pulp production by 10,000 tonnes.
