Key Points

• Lumber earnings: C$107.9 million in Q3 adjusted EBITDA, including approximately C$20 million from European operations.
• Consolidated results: C$98.1 million in adjusted EBITDA, alongside a reported operating loss of C$76.6 million.
• Financial position: Approximately C$1.1 billion in available liquidity, with capital spending expected to decline in 2027.

SCRAPMONSTER EDGE | FOREST PRODUCTS ANALYSIS

Lumber Earnings Remain Positive, but Financial Pressure Persists

Canfor's lumber segment continued generating positive adjusted EBITDA despite challenging market conditions. However, its quarterly adjusted EBITDA declined by approximately 25.4% from C$144.7 million in Q2 to C$107.9 million in Q3.

The distinction between segment earnings and company-wide profitability is important. Although consolidated adjusted EBITDA remained positive at C$98.1 million, Canfor recorded a C$76.6 million operating loss.

Industry takeaway: Lower lumber duties and reduced capital-spending requirements may help Canfor manage financial pressure, but a sustained improvement will depend on lumber demand, pricing and operating costs. The company's European and North American markets continue to face different conditions, reinforcing the importance of regional performance.

European Lumber Operations Contribute C$20 Million

Canfor's European lumber operations generated approximately C$20 million in adjusted EBITDA during Q3, benefiting from lower log costs and improved pricing despite scheduled summer production downtime in July.

In North America, improved sales realizations and stronger Southern Yellow Pine shipments helped support earnings.

However, European lumber shipment volumes declined from the previous quarter, largely due to seasonal downtime. Market conditions also remained uneven, with subdued construction activity and ample supply weighing on the United Kingdom.

Canfor's lumber business generated approximately C$280 million in adjusted EBITDA during January–September 2026.

Pulp and Paper Results Improve by C$14 Million

Canfor's pulp and paper operations generated approximately C$1.5 million in adjusted EBITDA during the third quarter, improving from an adjusted EBITDA loss of C$12.2 million in Q2.

The results exclude approximately C$38.4 million in adjusting and one-time items, including costs associated with the announced closure of the Northwood pulp mill in British Columbia.

The company's paper business continued to perform relatively well, generating C$10.5 million in quarterly EBITDA and approximately C$26 million year to date.

Liquidity Remains at C$1.1 Billion as Investment Spending Moderates

Canfor ended the third quarter with approximately C$1.1 billion in available liquidity and net debt of approximately C$364 million, excluding its duty-related loan.

Available liquidity declined by roughly C$70 million during the quarter, primarily reflecting the acquisition of PinkWood and capital expenditures associated with the Iron Mountain sawmill project.

The company expects capital spending of approximately C$210 million in 2026, including C$40 million for pulp operations. Spending is projected to decline to approximately C$100 million in 2027 following the completion of major investments.

Lower U.S. softwood lumber duty rates, effective from mid-October, are also expected to provide some relief to Canadian lumber producers. However, Canfor anticipates continued pressure from subdued North American demand and weaker seasonal purchasing activity.