Canfor Reports Smaller Q3 Loss as Cost Cuts Lift Margins

Results and market outlook

Canfor's third quarter showed progress on profitability even while still in the red: adjusted diluted EPS was a loss of C$0.48 versus a C$1.47 loss a year earlier. The company's gross margin climbed to 26.9%, up 14 percentage points, reflecting restructuring and expense reductions that are beginning to show through.

Management flagged a softer US lumber backdrop for the fourth quarter and said competitors' pulp capacity remains elevated, keeping pressure on that side of the business.

Plants, acquisitions, and cost moves

Efficiency moves are still rolling. Announced in July, Canfor will shutter its Fox Creek sawmill as well as the Northwood pulp mill. Northwood, in Prince George, is slated to shut by year end, with additional savings carrying into 2027. A recent tariff cut should ease costs as well, and the Iron Mountain sawmill upgrade in Arkansas wrapped up in October.

The PinkWood deal closed smoothly. PinkWood is Canada's largest maker of I-joists, a specialty product that commands better pricing and helps buffer expected fourth quarter softness tied to a tepid US housing market.

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Valuation, buybacks, and liquidity

The bottom line from coverage: the fair value estimate for no-moat Canfor stays at C$17 per share, but modeled revenue over the next 10 years is lowered by about 5% to reflect weaker lumber shipments from US housing. Buybacks remain on hold; the company executed no repurchases in the third quarter and has also completed none in 2026 to date. The current normal course issuer bid is scheduled to expire on March 22, and a successor authorization could be launched whenever management chooses. Management is seen prioritizing its C$1.1 billion in liquidity in case conditions deteriorate.

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