West Fraser Q4 & Full-Year 2025 Results:

1. Executive Overview

West Fraser reported very weak financial results for Q4 2025 and full-year 2025, driven primarily by:

• Severe restructuring and impairment charges ($712 million pre-tax)

• Prolonged softwood lumber duties and new U.S. tariffs

• Oversupply in lumber and OSB markets

• Housing affordability constraints suppressing demand

Despite these challenges, management emphasized strategic progress in mill modernization, capacity rationalization, and long-term positioning.

2. Consolidated Financial Performance

Q4 2025 Results

• Sales: $1.165 billion (↓ vs. Q3 2025: $1.307 billion)

• Net loss: $(751) million

• Loss per diluted share: $(9.63)

• Adjusted EBITDA: $(79) million (–7% margin)

Key driver of losses:

• $712 million of restructuring and impairment charges (non-cash, but highly material)

Without these charges, underlying performance still remained negative, indicating weak operating fundamentals, not just accounting effects.

Full-Year 2025 Results

• Sales: $5.462 billion (↓ from $6.174 billion in 2024)

• Net loss: $(937) million

• Loss per diluted share: $(12.08)

• Adjusted EBITDA: $56 million (vs. $673 million in 2024)

➡️ Takeaway: Profitability deteriorated sharply year-over-year, with EBITDA margins collapsing from double digits in 2024 to ~1% in 2025.

3. Segment-Level Performance Analysis

Lumber Segment

• Q4 Adjusted EBITDA: $(57) million

• Full-year Adjusted EBITDA: $(100) million (even excluding impairments)

Issues:

• Southern Yellow Pine (SYP) and SPF oversupply

• Elevated Canadian softwood lumber duties

• New U.S. Section 232 tariffs

• Mill curtailments and closures due to uneconomic operations

➡️ Lumber is currently the weakest segment structurally, highly exposed to tariffs and housing demand.

North America Engineered Wood Products (NA EWP)

• Q4 Adjusted EBITDA: $(24) million

• Full-year Adjusted EBITDA: $153 million (excluding impairments)

Observations:

• OSB demand softened significantly late in the year

• Large impairment charges ($239 million) tied to OSB assets

• Remains core to long-term strategy, but near-term pressure persists

➡️ NA EWP is still profitable on a normalized basis but increasingly cyclical.

Europe Engineered Wood Products

• Q4 Adjusted EBITDA: $4 million

• Full-year Adjusted EBITDA: $5 million

Characteristics:

• Low-margin but stable

• Gradual recovery expected as inflation and rates ease in Europe

➡️ Acts as a stabilizing but non-growth segment.

Pulp & Paper

• Q4 Adjusted EBITDA: $(1) million

• Full-year Adjusted EBITDA: $(2) million

Context:

• Global pulp markets disrupted

• Chinese demand uncertainty due to tariffs

• NBSK pricing expected to be flat to slightly higher

➡️ Marginal contributor with limited earnings visibility.

4. Capital Allocation & Balance Sheet

Liquidity

• Cash & short-term investments: $202 million (↓ from $641 million in 2024)

• Significant cash burn from capex, dividends, buybacks, and losses

Capital Expenditures

• Q4 capex: $139 million

• 2025 capex: $411 million

• 2026 guidance: $300–$350 million (lower, reflecting discipline)

Shareholder Returns

• Dividends paid in 2025: $101 million

• Q4 dividend: $0.32/share

• Share repurchases (2025): $124 million total

➡️ Management continues dividends and buybacks despite losses, signaling confidence but also reducing liquidity flexibility.

5. Trade & Tariff Risk (Major Strategic Overhang)

• Canadian softwood lumber duties ongoing since 2017

• March 2025: Temporary 25% IEEPA tariff (now under U.S. Supreme Court review)

• October 2025: New 10% Section 232 tariff, still in effect

➡️ Tariffs materially:

• Increase cost base

• Reduce competitiveness of Canadian operations

• Create forecasting uncertainty across all wood products

6. Operational Outlook (2026)

Demand Expectations

• North America: Modest-to-weak near-term demand

• Housing starts: ~1.25–1.28 million units (below long-term needs)

• Mortgage rate uncertainty remains a key risk

Shipment Guidance (Reiterated)

• Lumber: 2.4–2.7 billion board feet

• NA OSB: 5.9–6.3 billion sq. ft.

• Europe OSB: 1.0–1.25 billion sq. ft.

Cost Outlook

• Input costs expected to be relatively stable

• Labor availability and equipment lead times improving

➡️ Management is positioning for survivability and leverage to recovery, not near-term growth.

7. Strategic Interpretation

Positives

• Aggressive asset rationalization

• Modernized mills improve long-term cost position

• Strong industry positioning if housing recovers

• Continued access to capital markets and liquidity

Negatives

• Earnings quality severely impaired

• High exposure to political trade decisions

• Lumber segment structurally challenged

• Cash reserves materially reduced

8. Bottom-Line Assessment

This press release reflects a company in cyclical distress but strategic transition.

• 2025 was a reset year, marked by impairments and restructuring

• Near-term outlook remains challenging and fragile

• Long-term value depends heavily on:

  • Housing recovery

  • Tariff resolution

  • Realization of cost improvements from capital investments

Investor framing:
West Fraser is currently a high-beta, macro-dependent equity, suitable only for investors with a long-term horizon and tolerance for volatility.