Canfor will book a $321 million non-cash asset impairment in its fourth-quarter 2025 results, split between $215 million in lumber and $106 million in pulp and paper.
The charges reflect surging log costs across European operations and persistent weakness in global pulp benchmark prices.
In lumber, the write-down targets Canfor’s European assets, including its 77% stake in Vida AB. Log supply constraints in the region have pushed costs sharply higher, eroding sawmill asset values. In pulp, impairments at Canfor Pulp Products Inc.—54.8% owned by Canfor—stem from fibre access challenges alongside multi-year declines in U.S. dollar pulp list prices.
Canfor Pulp separately disclosed its $106 million impairment and flagged mounting covenant pressure following the charge. The Prince George, British Columbia-based producer now estimates a net debt-to-capitalization ratio of 116% at year-end 2025, with an EBITDA interest coverage ratio of negative 0.1 times.
After renegotiating its loan facility in December 2025, Canfor Pulp secured a covenant waiver through the fourth quarter. It now faces tighter financial tests in the first quarter of 2026, including a 55% leverage cap and a minimum interest coverage ratio of 1.5 times if leverage exceeds 42.5%.
Management expects continued weakness in pulp markets and ongoing macroeconomic headwinds to likely trigger covenant breaches by March 31, 2026. The company is pursuing mitigation measures while advancing Canfor’s proposed acquisition, which is scheduled for a shareholder vote on March 6. Discussions with lenders on additional covenant relief remain paused pending the transaction’s outcome.
The impairment charges are non-cash and do not affect Canfor’s liquidity or day-to-day operations.
Canfor is a Vancouver-based global producer of lumber, pulp, paper, and renewable forest products, operating more than 50 facilities across Canada, the United States, and Europe.
Source: Canfor
