Canfor (CFP) investor relations material

Executive summary

• Q2 2026 saw a return to operating profitability, with reported operating income of $4.8 million and adjusted operating income of $24 million, a significant improvement from Q1 2026's losses, driven by stronger lumber segment results and improved pricing.

• Net loss narrowed to $18.5 million ($0.16/share), down from $72.1 million ($0.62/share) in Q1 2026; adjusted shareholder net loss was $5.6 million ($0.05/share).

• Announced permanent closures of Northwood NBSK pulp mill, Fox Creek sawmill in Alberta, and Urshult and Orrefors sawmills in Sweden to optimize operations and align with fiber supply.

• Completed acquisition of PinkWood Ltd., adding 46 million linear feet of annual I-joist production capacity and diversifying earnings.

• Pulp markets remained weak due to subdued demand and elevated inventories, but operational changes improved underlying performance.

Financial highlights

• Q2 2026 sales were $1,526.4 million, up from $1,359.1 million in Q1 2026 and $1,379.4 million in Q2 2025.

• Lumber segment adjusted operating income was $56.7 million, up from a loss of $63.7 million in Q1 2026.

• Pulp and paper segment posted an adjusted operating loss of $19.8 million, $3.6 million worse than Q1.

• Cash generated from operating activities was $209.9 million, up from cash used of $77.1 million in Q1 2026.

• Operating income before amortization was $114.5 million in Q2 2026, compared to $28.5 million in Q1 2026.

Outlook and guidance

• North American lumber markets expected to remain solid early in Q3 2026 but likely to moderate later due to affordability and macroeconomic uncertainty.

• Offshore lumber demand in Asia projected to remain weak; European markets expected to stay balanced with steady demand and constrained supply.

• Global softwood kraft pulp markets anticipated to remain under pressure in Q3 2026 due to new capacity and subdued demand.

• No major maintenance outages scheduled for pulp mills or paper machines for the rest of 2026.

• Expect restructuring costs of approximately CAD 30 million for Northwood closure and CAD 35 million for Fox Creek asset write-down in Q3.