The Vancouver-based forest products company reported operating income of $4.8 million, compared with an operating loss of $72.5 million in the first quarter. Adjusted operating income before one-time items reached $23.6 million, reversing a $92.5 million adjusted operating loss in the previous quarter. Sales increased to $1.53 billion, while the net loss attributable to shareholders narrowed to $18.5 million, or $0.16 per share.
The lumber segment was the main driver of the improvement, generating operating income of $41.2 million, compared with a loss of $43.7 million in the first quarter. Adjusted operating income for the segment reached $56.7 million, supported by higher lumber prices, increased production and improved manufacturing and product costs.
North American lumber markets strengthen
North American lumber markets strengthened modestly during the quarter as lean inventories, transportation constraints and seasonal demand supported benchmark prices. Southern Yellow Pine pricing benefited particularly from limited supply and increased substitution among lumber species.
Canfor said the improvement may prove temporary. The company expects North American markets to remain relatively firm early in the third quarter before moderating later in the period as housing affordability pressures and broader economic uncertainty continue to weigh on demand.
Offshore markets remained weaker, with subdued demand in Japan and China, while European markets showed some improvement amid lean inventories and constrained supply.
Pulp and paper losses deepen
The pulp and paper segment posted an operating loss of $23.1 million, widening from $16.2 million in the first quarter. Excluding a $3.3 million inventory write-down, the segment recorded an adjusted operating loss of $19.8 million.
Results were affected by lower pulp shipments and a 17% decline in production, largely due to a scheduled maintenance shutdown at Canfor’s Intercontinental NBSK pulp mill. Lower U.S.-dollar NBSK prices in China also weighed on earnings.
Global softwood pulp markets remained under pressure as subdued demand and elevated producer inventories weighed on pricing. Average NBSK list prices in China fell 4% from the previous quarter to US$658 per tonne, while global producer inventories ended May at 47 days of supply, near the upper end of the balanced range.
Canfor expects these conditions to persist through the third quarter as additional global pulp capacity enters the market and economic uncertainty limits demand. Demand for bleached kraft paper is forecast to remain stable, supported in part by paper-based packaging markets.
No major maintenance outages are planned at the company’s pulp mills or paper machine through the remainder of 2026.
Footprint changes continue
The quarterly report also reflected previously announced changes to Canfor’s operating footprint, including the permanent closures of the Urshult and Orrefors sawmills in Sweden, the Northwood pulp mill in British Columbia and the Fox Creek sawmill in Alberta.
Canfor also completed its acquisition of PinkWood Ltd., a Calgary-based producer of engineered wood products with annual capacity of approximately 46 million linear feet of I-joists.
The company said it remains focused on aligning production capacity with available fibre supply, lowering costs and improving the long-term competitiveness of its lumber and pulp-and-paper operations.
Canfor is a Vancouver-based forest products company producing lumber, engineered wood products, pulp and paper, wood pellets and renewable energy. The company operates more than 50 facilities across Canada, the United States and Europe and holds a 77% stake in Swedish sawmill producer Vida AB. Canfor shares trade on the Toronto Stock Exchange under the symbol CFP.