VANCOUVER – October 29, 2026 -- West Fraser Timber will indefinitely curtail its Huguley OSB mill in Lanett, Alabama and its lumber mill in Leola, Arkansas, and expects a $200 million to $220 million asset impairment loss in the fourth quarter of 2026. The company also reported a third-quarter net loss of $80 million, or $1.03 per diluted share.
Two U.S. mills to come offline in Q4 after orderly wind-downs
The curtailments will cut annual OSB capacity by 500 million square feet (3/8-inch basis) and Southern Yellow Pine (SYP) lumber capacity by 225 million board feet. West Fraser attributed the decision to continued weakness in demand for wood products used in new home construction and in repair and renovation.
CEO Sean McLaren said the company has "no near-term visibility" on a demand recovery. He also cited higher energy-related input costs.
Q3 sales fall to $1.363 billion as Adjusted EBITDA drops to $38 million
Sales declined from $1.434 billion in the second quarter. The loss widened from $61 million, or $0.78 per share, in Q2. Adjusted EBITDA fell to $38 million, or 3% of sales, from $59 million in the prior quarter.
The Lumber segment posted Adjusted EBITDA of $34 million, including a $12 million favourable duties adjustment. North America Engineered Wood Products (NA EWP) recorded $(4) million. Europe EWP delivered $4 million.
Shipment guidance moves to the low end of 2026 ranges
West Fraser now expects SPF and SYP lumber shipments at the low end of its 2.4 to 2.7 billion board feet range. North American OSB shipments are expected at the low end of 5.9 to 6.3 billion square feet, reflecting the High Level, Alberta OSB curtailment completed in Q2. Europe OSB shipments remain targeted at 1.0 to 1.25 billion square feet.
Resin and wax costs rose by about $3 million in Q3 versus Q2 across all mills. Diesel inflation has added roughly $15 per mfbm to SPF and SYP lumber costs since the start of the year. Much of the higher outgoing freight cost has been passed to customers through surcharges. In some areas the company has deliberately reduced log procurement in response to higher costs.
Liquidity rises to $1.2 billion after $500 million term loan refinancing
West Fraser issued a $500 million term loan due September 2029, refinancing an existing $300 million term loan due May 2028. It repaid $55 million of operating loans in the quarter. Its $1 billion credit facility was undrawn at October 2, 2026, and cash and short-term investments stood at $203 million.
Capital expenditures totalled $212 million in the first nine months, with full-year 2026 spending still expected at $300 million to $350 million. Dividends paid year-to-date reached $75 million, and a $0.32 per share dividend declared in Q3 is payable in Q4. No shares have been repurchased under the 2026 normal course issuer bid.
Final AR7 combined duty rate set at 20.02%
The final AR7 combined duty rate of 20.02% maintains West Fraser's position as holder of the lowest duty deposit rate.
U.S. housing starts ran at a seasonally adjusted annual rate of 1.22 million units in September, with permits issued for 1.40 million units, according to the U.S. Census Bureau. West Fraser said weak consumer confidence, mortgage rates and affordability remain near-term constraints, and demand may decline further if the broader economy or employment slows. In Europe and the U.K., it expects demand to stay broadly in line with current levels.