Shares of West Fraser Timber Co. Ltd. dipped Thursday after the Vancouver-based company posted a third-quarter net loss of US$204 million, or US$2.63 per diluted share, as the

forestry sector continues to navigate what its chief executive called an “extended cycle trough.”

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to a loss of US$144 million in the third quarter, down from US$62 million a year earlier.

On a call with analysts, West Fraser chief executive Sean McLaren said mortgage and interest rates continue to weigh on U.S. housing demand and affordability, along with “uninspiring” levels of new home construction south of the border and subdued demand for home repairs and remodelling.

West Fraser reported sales of US$1.3 billion in the third quarter, down from US$1.43 billion a year earlier.

Despite a “tough” quarter, McLaren said West Fraser has nearly US$1.6 billion of available liquidity. The company reported a net cash balance of US$212 million, down from US$310 million in the previous quarter, based on “softness” in its

lumber product portfolio as well as lower earnings, which was partially offset by a reduction of working capital.

“We continue to monitor macroeconomic conditions complicated by shifting trade policies. Despite such a backdrop, the company remains well positioned to navigate the dynamic and difficult business environment we face today, backed up by a strong financial position,” said McLaren.

In its lumber segment, the company said operating losses totalled US$169 million, or an adjusted EBITDA loss of US$123 million. This included US$67 million of export duty expenses related to the finalization of AR6, the U.S. Commerce Department’s sixth administrative review of countervailing and anti-dumping duties on imports of certain

softwood lumber products from Canada. As a result of the review, final combined duty rates for most Canadian producers rose from around 14.40 per cent to as high as 35.19 per cent. Chief financial officer Chris Virostek said West Fraser’s combined rate is 26.5 per cent, “the lowest duty rate in the Canadian industry.”

In addition to those levies, the U.S. administration imposed a 10 per cent tariff on softwood

timber and lumber imports effective Oct. 14 under Section 232 of the U.S. Trade Expansion Act.

West Fraser’s North American engineered wood products segment had a loss of US$88 million, or an adjusted EBITDA loss of US$15 million, largely driven by lower pricing on oriented strand board (OSB).

The company’s pulp and paper segment posted a loss of US$10 million, or an adjusted EBITDA loss of US$6 million, which it attributed to the annual maintenance shutdown at its Cariboo Pulp & Paper facility in Quesnel, B.C., during the quarter.

Despite a fire at West Fraser’s Cowie mill in Scotland in August that cast a shadow over the company’s progress across the pond, McLaren sees “green shoots” in its European business, which generated US$10 million in income, or adjusted EBITDA of US$1 million, in the third quarter.

The lumber producer confirmed its 2025 capital expenditure guidance range of US$400 million to US$450 million, with capital expenditures in the third quarter totalling US$90 million. McLaren said the company is wrapping up several capital projects, which will continue to lower costs as they are operationalized.

He also highlighted the fact that West Fraser “acted early” in the current downcycle by removing 170 million board feet of capacity in its Canadian lumber business in 2022 and 650 million board feet of capacity in 2023 and 2024 through the permanent or indefinite closure of five lumber mills in the U.S. and Canada. The company also sold three pulp mills for US$124 million and acquired “high quality” lumber and OSB assets.

“In the aggregate, all these actions to high grade the portfolio have made us better at the bottom of the cycle,” said McLaren. “Going forward, we will continue to take this approach of managing our asset portfolio to do what is both prudent for the long term and necessary in the short term.”

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