VANCOUVER, BC (News release) -- Canfor Pulp Products Inc. reported its second quarter of 2025 results:

Overview.

For the second quarter of 2025, the Company reported an operating loss of $5 million and a net loss of $7 million, equivalent to $0.10 per share.
Global pulp market fundamentals weakened throughout the second quarter amid trade uncertainties, particularly in China; global pulp producer inventories climbed to well above the balanced range.
Rising global economic uncertainty put downward pressure on North American kraft paper markets.
The Canadian dollar strengthened by 3 cents, or 4%, versus the US-dollar quarter-over-quarter, negatively impacting pulp and paper sales unit realizations.
Pulp and paper production was relatively comparable quarter-over-quarter.

Financial results.

The following table summarizes selected financial information for CPPI for the comparative periods:

(millions of Canadian dollars, except per share amounts)		Q2 2025		Q1 2025		YTD 2025		Q2 2024			YTD 2024
Sales	$	177.9	$	196.2	$	374.1	$	220.0	$	442.3
Reported operating income before amortization	$	3.5	$	21.3	$	24.8	$	11.0	$	12.2
Reported operating income (loss)	$	(5.3)	$	10.8	$	5.5	$	(5.6)	$	(21.3)
Adjusted operating income before amortization¹	$	6.4	$	21.3	$	27.7	$	11.0	$	12.2
Adjusted operating income (loss)¹	$	(2.4)	$	10.8	$	8.4	$	(5.6)	$	(21.3)
Net income (loss)	$	(6.7)	$	6.0	$	(0.7)	$	(6.3)	$	(8.7)
Net income (loss) per share, basic and diluted	$	(0.10)	$	0.09	$	(0.01)	$	(0.10)	$	(0.13)
1. Adjusted results referenced throughout this news release are defined as non-IFRS financial measures. For further details, refer to the "Non-IFRS financial measures" section of this document.

The Company reported an operating loss of $5.3 million for the second quarter of 2025, compared to operating income of $10.8 million for the first quarter of 2025. After adjusting for a $2.9 million inventory write-down in the current period, the Company's operating loss was $2.4 million for the second quarter of 2025. These results were largely driven by a decline in both the Company's average Northern Bleached Softwood Kraft ("NBSK") pulp and paper unit sales realizations in the current quarter and, to a lesser extent, an uplift in pulp unit manufacturing costs.

Commenting on the Company's second quarter performance, CPPI's President and Chief Executive Officer, Stephen Mackie, remarked, "Our results for the second quarter of 2025 were strongly influenced by persistent global economic uncertainty, significantly impacting global pulp and paper market fundamentals. We anticipate these market pressures to continue throughout the third quarter. We are closely monitoring these external factors but continue to remain focused on optimizing areas within our control, including improving safety, reliability, productivity and cost structure."

Second quarter highlights.

Global softwood pulp markets experienced downward pressure throughout the second quarter of 2025, primarily driven by weak demand from China, largely tied to the impact of new trade policies between China and the US, as well as general global economic uncertainty. As a result, US-dollar NBSK list prices to China, the world's largest pulp consumer, started the quarter at a high of US$798 per tonne, before declining steadily throughout the period, ending June at US$690 per tonne. For the current quarter overall, US-dollar NBSK pulp list prices to China averaged US$734 per tonne, down US$59 per tonne, or 7%, from the prior quarter. As a result of weak demand, global softwood pulp producer inventories climbed significantly through the second quarter of 2025 to well above the balanced range, ending May at 46 days of supply, an increase of 8 days compared to March 2025. Market conditions are generally considered balanced when inventories are in the 32-43 days of supply range.

The Company's average NBSK pulp unit sales realizations experienced a modest decline compared to the previous quarter, primarily reflecting US-dollar NBSK pricing pressure in China combined with a 3 cent, or 4%, stronger Canadian dollar. These factors, however, were moderated in the current period by an uptick in US-dollar pricing to other global regions, coupled with a favourable lag in the timing of shipments versus orders. As a result, the full impact of weak US-dollar China list prices towards the end of the second quarter will not be evident in the Company's average NBSK pulp unit sales realizations until the third quarter of 2025.

Pulp production was 102,000 tonnes for the second quarter of 2025, down 2,000 tonnes, or 2%, from the first quarter of 2025, primarily due to minor operational disruptions in the current period.

Operating income in the Company's paper segment was $1.5 million, compared to $5.4 million in the previous quarter, largely driven by a slight decline in North American US-dollar paper pricing combined with the stronger Canadian dollar in the current period.

Outlook.

Looking forward, global softwood kraft pulp market conditions are anticipated to remain weak throughout the third quarter of 2025 as purchasing activity, particularly from China, is forecast to be soft through the traditionally slower summer period, despite the announcement of market curtailments from some Nordic pulp producers. As a result, global pulp producer inventories are forecast to remain well above the balanced range through the third quarter of 2025.

The Company continues to actively monitor developments in the trade relationship between Canada and the United States. In the event that tariffs are imposed on US pulp and paper shipments, the Company has mitigation strategies intended to largely offset potential impacts.

The subdued demand for bleached kraft paper in North America observed at the end of the first quarter and throughout the second quarter is anticipated to persist into the third quarter of 2025. This outlook is principally attributable to the ongoing uncertainties related to Canada-US trade relations, as well as general global economic pressures.

A minor scheduled maintenance outage will take place during the third quarter of 2025 at the Company's Intercontinental NBSK pulp mill and at its paper machine. This maintenance outage is projected to reduce both NBSK market pulp production and paper production by 2,000 tonnes each.