VANCOUVER, British Columbia (News release) -- Canfor Pulp Products Inc. ("The Company" or "CPPI") (TSX: CFX) reported its fourth quarter of 2025 results:
Overview.
-
Q4 2025 operating loss of $85.6 million; net loss of $133.6 million, or $2.05 per share.
-
As a result of the prolonged weakness in global pulp markets and the Company's persistent challenges accessing economically viable fibre, an asset write-down and impairment charge totaling $106.5 million was recognized in Q4 2025, which included a write-off of a previously recognized deferred tax asset of $52.5 million.
-
After taking into consideration adjusting and one-time items1 totaling $57.5 million, the adjusted operating loss for Q4 2025 was $28.1 million, compared to a similarly adjusted operating loss of $11.1 million in Q3 2025.
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Global softwood pulp markets were relatively flat through Q4 2025, principally driven by elevated pulp producer inventory levels.
-
Pulp production declined 4% in Q4 2025 (versus Q3 2025) primarily due to a scheduled maintenance outage at its Northwood NBSK pulp mill, including a slower than anticipated restart.
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Jointly with Canfor, the Company announced in December 2025 it had entered into an Arrangement Agreement, where Canfor would acquire all of the issued and outstanding common shares of Canfor Pulp not already owned by Canfor, for either $0.50 in cash consideration or 0.0425 of a common share of Canfor (the "Proposed Transaction"). Closing is anticipated in Q1 2026 and is subject to all applicable shareholder, court and regulatory approvals.
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As announced in February 2026, Management's forecasts indicate a breach of financial covenants is highly probable as early as March 31, 2026. Should the Proposed Transaction not close, the Company would re-engage with its lenders for further temporary relief while it works to undertake a restructuring process.
Financial results.
The following table summarizes selected financial information for CPPI for the comparative periods:
|
(millions of Canadian dollars, except per share amounts) |
Q4 2025 |
Q3 2025 |
YTD 2025 |
Q4 2024 |
YTD 2024 |
|||||||||||||||||||||
|
Sales |
$ |
140.2 |
$ |
164.6 |
$ |
678.9 |
$ |
163.1 |
$ |
798.6 |
||||||||||||||||
|
Reported operating income (loss) before amortization, asset write-downs and impairment2 |
$ |
(20.1 |
) |
$ |
(7.2 |
) |
$ |
(2.5 |
) |
$ |
12.3 |
$ |
43.3 |
|||||||||||||
|
Reported operating income (loss) |
$ |
(85.6 |
) |
$ |
(16.0 |
) |
$ |
(96.1 |
) |
$ |
4.1 |
$ |
(226.5 |
) |
||||||||||||
|
Net income (loss)3 |
$ |
(133.6 |
) |
$ |
(12.4 |
) |
$ |
(146.7 |
) |
$ |
2.9 |
$ |
(161.9 |
) |
||||||||||||
|
Net income (loss) per share, basic and diluted3 |
$ |
(2.05 |
) |
$ |
(0.19 |
) |
$ |
(2.25 |
) |
$ |
0.04 |
$ |
(2.49 |
) |
||||||||||||
1. Adjusted operating loss as well as adjusting and one-time items referenced throughout this news release are defined as non-IFRS financial measures. For further details, refer to the "Fourth quarter results, including adjusting and one-time items" table and the "Non-IFRS financial measures" section of this news release.
2. An asset write-down and impairment charge totaling $106.5 million was recorded in Q4 2025 (Q3 2025 and Q4 2024 - no asset write-down and impairment adjustment was recognized), which included a $52.5 million write-off of a previously recognized deferred tax asset. The deferred tax asset write-off is not included in reported operating income (loss) and as a result, reported operating income (loss) in the table above, is only adjusted by $54.0 million, representing the asset write-down and impairment charge associated with property, plant and equipment and material and supplies inventories.
3. Attributable to equity shareholders of the Company.
The Company reported an operating loss of $85.6 million for the fourth quarter of 2025, compared to an operating loss of $16.0 million for the third quarter of 2025.
Commenting on the Company's fourth quarter results, CPPI's President and Chief Executive Officer, Stephen Mackie, said, "The Company faced another extremely challenging quarter, as ongoing global economic uncertainty weighed heavily on softwood pulp market conditions. As a result, we remain cautious heading into 2026 as we continue to navigate significant external pressures on our business, including the prolonged downturn in softwood pulp markets and the ongoing constraints in securing economically viable fibre."
Fourth quarter results, including adjusting and one-time items.
As previously announced, during the fourth quarter of 2025, the Company identified several indicators of impairment under IFRS Accounting Standards, including sustained declines in global US-dollar pulp list prices, persistent challenges in securing economically viable fibre, a reduction in the Company's market capitalization and an increased risk of financial covenant non-compliance. Consequently, the Company recognized a non-cash asset write-down and impairment charge totaling $106.5 million in the current quarter, which included a write-off of a previously recognized deferred tax asset of $52.5 million.
After taking account of adjusting items totaling $57.5 million, as outlined in the table below, the Company's adjusted operating loss was $28.1 million, compared to an adjusted operating loss of $11.1 million for the third quarter of 2025. These adjusted results largely reflect the continued impact of soft global pulp market conditions throughout most of the current period, combined with reduced pulp production associated with the Company's scheduled maintenance downtime at its Northwood Northern Bleached Softwood Kraft ("NBSK") pulp mill ("Northwood").
|
(millions of Canadian dollars) |
Q4 2025 |
Q3 2025 |
YTD 2025 |
Q4 2024 |
YTD 2024 |
|||||||||||||||
|
Reported operating income (loss) |
$ |
(85.6 |
) |
$ |
(16.0 |
) |
$ |
(96.1 |
) |
$ |
4.1 |
$ |
(226.5 |
) |
||||||
|
Asset write-down and impairment⁴ |
$ |
54.0 |
$ |
- |
$ |
54.0 |
$ |
- |
$ |
211.0 |
||||||||||
|
Inventory write-down, net⁵ |
$ |
3.5 |
$ |
4.9 |
$ |
11.3 |
$ |
- |
$ |
- |
||||||||||
|
Adjusted operating income (loss)⁶ |
$ |
(28.1 |
) |
$ |
(11.1 |
) |
$ |
(30.8 |
) |
$ |
4.1 |
$ |
(15.5 |
) |
||||||
|
Amortization |
$ |
11.5 |
$ |
8.8 |
$ |
39.6 |
$ |
8.2 |
$ |
58.8 |
||||||||||
|
Adjusted operating income (loss) before amortization, asset write-down and impairment⁴˒⁶ |
$ |
(16.6 |
) |
$ |
(2.3 |
) |
$ |
8.8 |
$ |
12.3 |
$ |
43.3 |
||||||||
4. An asset write-down and impairment charge totaling $106.5 million was recorded in Q4 2025 (Q3 2025 and Q4 2024 - no asset write-down and impairment adjustment was recognized), which included a $52.5 million write-off of a previously recognized deferred tax asset. The deferred tax asset write-off is not included in reported operating income (loss) and as a result, reported operating income (loss) in the table above, is only adjusted by $54.0 million, representing the asset write-down and impairment charge associated with property, plant and equipment and material and supplies inventories.
5. A $3.5 million net inventory write-down expense was recognized in Q4 2025 (Q3 2025 - $4.9 million net inventory write-down expense, Q4 2024 - no inventory valuation adjustment was recognized).
6. 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.
Fourth quarter highlights.
Global softwood pulp markets were relatively flat through the fourth quarter of 2025, driven mainly by elevated pulp producer inventory levels. Towards the end of the period, however, buyer sentiment began to improve. Lower global pulp prices prompted a modest uptick in purchasing activity, particularly in China, as producers worked to draw down higher-than-average inventory levels. As a result, US-dollar NBSK list prices to China, the world's largest pulp consumer, gained some positive momentum late in the quarter, finishing December at US$690 per tonne. Despite this late uplift, for the fourth quarter overall, US-dollar NBSK pulp list prices to China averaged US$671 per tonne, down US$19 per tonne, or 3%, from the prior quarter. Outside China, market conditions remained difficult. Demand and pricing in other global regions weakened through the fourth quarter, with the average US-dollar NBSK pulp list price to North America falling by 8% from the previous quarter.
Global softwood pulp producer inventories remained elevated and at the top end of the balanced range throughout the current quarter, ending December 2025 at 47 days of supply, in line with September 2025. Market conditions are typically considered balanced when inventories fall within the 39-47 days of supply.
The Company's average NBSK pulp unit sales realizations in the current quarter experienced a modest decline relative to the previous quarter, principally a result of the decrease in global US-dollar NBSK pulp list prices, partially offset by a 1% weaker Canadian dollar.
Pulp production was 103,000 tonnes for the fourth quarter of 2025, down 4,000 tonnes, or 4%, from the third quarter of 2025. Early in the current quarter, the Company successfully completed its scheduled maintenance outage at Northwood as planned. However, the restart of Northwood was delayed by several days due to operational difficulties unrelated to the scheduled maintenance downtime. Combined, these factors impacted NBSK pulp production by approximately 15,000 tonnes in the current quarter.
In December 2025, as a result of a forecast covenant breach at December 31, 2025, the Company renegotiated its existing operating loan facility. Under the terms of the amended agreement, the Company granted security to Canfor Pulp's lenders and obtained a waiver of its financial covenants for the quarter ended December 31, 2025 (the "Covenant Relief Period"). During the Covenant Relief Period, the Company was subject to a minimum liquidity test of $10.0 million, effectively reducing its operating loan facility from $160.0 million to $150.0 million. This Covenant Relief Period only applied to the quarter ended December 31, 2025, and does not apply to future periods.
Pulp outlook.
Looking ahead, global softwood kraft pulp market conditions are anticipated to remain weak into 2026 as ongoing economic uncertainty, particularly between China and the US, continues to weigh on market demand despite some cautious optimism seen late in 2025.
The Company continues to closely monitor developments in Canada-US trade relations. Should tariffs be applied to US pulp and paper shipments, the Company has mitigation strategies in place that are projected to partially offset potential impacts.
As announced on February 17, 2026, Management's forecast indicates that due to global pulp market conditions remaining weak, ongoing macroeconomic headwinds and continued challenges accessing economic fibre in British Columbia, the Company may experience continued declines in financial performance during the first quarter of 2026, making it highly probable that CPPI will not comply with its financial covenants at March 31, 2026.
Although Management is undertaking mitigation initiatives and advancing the Proposed Transaction, the ultimate success of these actions cannot be assured at this time. Management's discussions with its lenders regarding future financial covenant relief are currently on hold, pending the outcome of the Proposed Transaction. Should the Proposed Transaction not close, the Company would re-engage with its lenders for further temporary relief while it works to undertake a restructuring process.
Paper outlook.
Demand for bleached kraft paper, both globally and within North America, is anticipated to remain subdued throughout the first half of 2026. This forecast trend is primarily attributed to ongoing uncertainties in Canada-US trade relations, coupled with broader global economic challenges such as overcapacity and stable demand.
A maintenance outage is currently planned at the Company's paper machine in the second quarter of 2026 with a projected 10,000 tonnes of reduced paper production.
