Interfor reported a sharp improvement in second-quarter earnings as higher lumber prices, increased production and further reductions in unit costs lifted operating results, while the Canadian producer warned that substantially higher U.S. duties could weigh on the second half of the year.<\/p>\n
The company generated adjusted EBITDA of C$92.3 million in the second quarter of 2026, three times the C$30.7 million recorded in the previous quarter and more than five times the C$17.2 million reported a year earlier. Sales increased to C$804.4 million from C$643.2 million in Q1 and C$780.5 million in the second quarter of 2025.<\/p>\n
Interfor returned to a small profit, reporting net earnings of C$1.0 million, or C$0.02 per share, compared with a net loss of C$63.3 million in the first quarter. Operating cash flow after working-capital changes reached C$100.8 million, helping reduce net debt to C$816.7 million from C$857.7 million at the end of March.<\/p>\n
The improvement came as lumber markets strengthened across Interfor's operating regions. Its average lumber selling price reached C$739 per thousand board feet (mfbm), an increase of C$73, or 11%, from the previous quarter. The company attributed the price recovery largely to production curtailments across the North American industry in recent years combined with seasonal demand.<\/p>\n
Price gains extended into July. Compared with second-quarter averages, the Southern Yellow Pine Composite increased 4%, KD Hem-Fir Stud 2x4 9' rose 12%, Western SPF gained 9% and Eastern SPF increased 10%.<\/p>\n
Higher output combines with lower production costs<\/strong><\/p>\n Interfor produced 927 million board feet of lumber during the quarter, up 71 million board feet from Q1. The increase was primarily driven by the ramp-up of the rebuilt Thomaston sawmill in Georgia and higher operating rates at the company's U.S. Northwest and British Columbia operations following temporary curtailments early in the year.<\/p>\n Shipments reached 941 million board feet, exceeding production and reducing lumber inventories by 14 million board feet during the quarter.<\/p>\n At the same time, production costs continued to fall despite inflation in fuel and other inputs. Unit production costs declined for a third consecutive quarter and were C$41 per mfbm, or 6%, below the full-year 2025 level.<\/p>\n Interfor said the improvement was driven by productivity measures and optimization of its operating portfolio rather than simply higher utilization rates, indicating that part of the cost reduction could be maintained even if market conditions weaken.<\/p>\n The Thomaston operation made a particularly significant contribution to the quarter. The multi-year rebuild was substantially completed during Q1 and the mill is now ramping up toward annual production capacity of 240 million board feet. After contributing negatively to adjusted EBITDA during the final construction phase in the first quarter, the sawmill generated what Interfor described as a significant positive contribution in Q2.<\/p>\n Capital expenditure totaled C$22.7 million during the quarter, including C$9.7 million of discretionary investment, primarily related to completion of the Thomaston project. Interfor expects approximately C$90 million of capital expenditure for the full year.<\/p>\n Logistics conditions improved modestly from the first quarter following changes across the company's transportation network, although Interfor said supply-chain difficulties remain an issue, particularly in the U.S. South.<\/p>\n Higher Canadian lumber duties loom over second half<\/strong><\/p>\n Despite the stronger operating performance, trade measures remain a significant source of uncertainty for Interfor's Canadian production.<\/p>\n The U.S. Department of Commerce's preliminary combined anti-dumping and countervailing duty rate from the seventh administrative review, covering 2024 shipments, stands at 25.18% after the preliminary countervailing rate was revised higher at the end of June.<\/p>\n If maintained in the final determination expected during the second half of 2026, Interfor expects to record a non-cash incremental expense, including interest, of approximately US$76 million.<\/p>\n The company received US$4.6 million during Q2 from the liquidation of anti-dumping duties relating to a period covered by the first administrative review, followed by another US$1 million in July.<\/p>\n Interfor said the additional Section 338 tariffs announced by the U.S. administration in July, as well as the Section 301 measures affecting imports from a number of trading partners, do not apply to its products exported to the United States.<\/p>\n Its exposure to Canadian lumber trade measures is also partly limited by the geographical structure of its operations. Approximately 65% of Interfor's lumber is produced and sold within the U.S., while roughly 20% of total production is exported from Canada to the U.S. and therefore exposed to duties, tariffs or other potential trade restrictions.<\/p>\n Lumber prices continue higher into Q3<\/strong><\/p>\n Interfor expects North American lumber markets to remain volatile as production continues to adjust to demand and the market absorbs changes in monetary policy, tariffs, energy prices and trade conditions.<\/p>\n For now, the price recovery that supported the second-quarter results has continued. July benchmark prices remained above Q2 averages across the major lumber categories tracked by the company, with gains ranging from 4% for Southern Yellow Pine to 12% for Hem-Fir studs.<\/p>\n Further production curtailments could continue to provide support if demand remains subdued. Interfor expects industry-wide capacity adjustments, seasonal demand and persistent logistics constraints to remain important drivers of lumber prices through the remainder of 2026.<\/p>\n The company also pointed to oil prices as another variable for the market, affecting transportation and raw-material costs as well as end-use demand. Higher logistics costs could additionally make offshore lumber shipments into North America less competitive, including imports from Europe.<\/p>\n Over the medium term, Interfor expects Canadian lumber to remain an important source of supply for the U.S. market. It sees limited scope for a rapid expansion of U.S. production capacity because of labour availability, equipment lead times, constraints on residual outlets and the lengthy ramp-up required for new or rebuilt sawmills.<\/p>\n The company also continues to see structural support for lumber consumption from the ageing U.S. housing stock, the shortage of available housing and demographic trends, although the immediate market remains dependent on how quickly housing activity responds to financing conditions.<\/p>","protected":false},"excerpt":{"rendered":" Interfor reported a sharp improvement in second-quarter earnings as higher lumber prices, increased production and further reductions in unit costs lifted operating results, while the Canadian producer warned that substantially higher U.S. duties could weigh on the second half of … Continue reading