GreenFirst Forest Products Inc. ((TSE:GFP)) has held its Q2 earnings call. Read on for the main highlights of the call.
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GreenFirst Forest Products Inc.’s recent earnings call painted a balanced picture of operational success and financial challenges. The company reported record production and strategic investments, yet faced financial losses and market difficulties, leading to a mixed sentiment among stakeholders.
Record Production Output
GreenFirst achieved a milestone in its production capabilities, reaching the highest output in its history with 116 million mfbm. This achievement not only marks a significant improvement in manufacturing costs but also sets a strong foundation for future operational efficiencies.
Strong Sales Volume
The company reported robust sales, shipping 110 million mfbm in the second quarter. This was bolstered by a record monthly sales volume with key home center partners, indicating strong demand and effective sales strategies.
Strategic Capital Investments
GreenFirst is making strategic capital investments, including a $25 million project for a new sawline, planer mill, and co-generation plant at its Chapleau facility. These investments are expected to enhance production capabilities and drive long-term growth.
Operational and Safety Improvements
The company delivered operational improvements that contributed $3 million to EBITDA and achieved a significant reduction in the recordable incident rate to 2.1, a 50% improvement compared to the previous year.
Government Support Initiatives
GreenFirst is exploring opportunities presented by the federal government’s $1.2 billion support plan for the industry. This initiative could provide crucial support and drive further growth for the company.
Negative Financial Performance
Despite operational successes, GreenFirst reported a net loss of $9.6 million and a negative EBITDA of $5.2 million for the second quarter of 2025. This highlights the financial pressures the company is facing.
Increased Duty Rates
The company is grappling with increased duty rates, which have risen from 14.4% to over 35% for Canadian shipments to the U.S. This significant increase is impacting costs and demand, posing a challenge to profitability.
Higher Cost of Sales
GreenFirst experienced a 29% increase in the cost of sales, driven by higher shipment volumes and increased average costs per unit. This rise in costs is affecting the company’s financial performance.
Challenging Market Conditions
The lumber market is facing uncertainties due to increased tariffs and potential U.S. tariffs, coupled with reduced demand stemming from housing affordability issues. These factors are contributing to a challenging market environment.
Non-Cash Expenses Impacting SG&A
The company’s SG&A expenses have increased due to non-cash expenses, which are impacting overall profitability and highlighting the need for cost management.
Forward-Looking Guidance
Looking ahead, GreenFirst is focused on managing cash and capital expenditures carefully, with strategic upgrades planned for the Chapleau facility. The company is also actively seeking to benefit from the federal government’s industry support plan. Despite the challenges, the record production levels achieved are expected to help reduce future costs and support growth.
In summary, GreenFirst Forest Products Inc.’s earnings call highlighted a mix of operational achievements and financial challenges. While the company is making strides in production and strategic investments, it faces significant financial pressures and market uncertainties. Stakeholders will be watching closely to see how the company navigates these challenges and leverages opportunities for growth.