Conifex Warns of Collapse as US Tariffs Push Timber Firm to the Brink

VANCOUVER, BC – March 23, 2026 – Conifex Timber Inc. is fighting for its survival, warning investors of “material uncertainty” about its ability to continue as a going concern after posting a staggering $35.7 million net loss for 2025. The dire financial results, released today, paint a grim picture of a company buckling under the weight of escalating U.S. softwood lumber tariffs, which have surged to a crippling 45.16% on its American-bound shipments.

In a dramatic bid to shore up its finances, the Vancouver-based company announced it has secured a $19 million lifeline from the Business Development Bank of Canada (BDC). The government-backed loan provides a critical injection of liquidity but underscores the severity of a crisis fueled by a protracted trade dispute that is pushing Canadian timber producers to the breaking point.

A Company on the Ropes

The year-end financial report reveals a significant deterioration in Conifex's financial health. The $35.7 million net loss for 2025 is a substantial increase from the $29.8 million loss reported in 2024. The company's EBITDA (earnings before interest, taxes, depreciation, and amortization), a key measure of operational profitability, plunged to a negative $27.5 million, more than doubling the negative $13.6 million recorded the previous year.

This financial bleeding has forced the company to take on more debt, which climbed to $87.7 million by the end of 2025, up from $77.3 million a year prior. The cash drain was so severe that Conifex was forced to defer principal payments on its Power Term Loan and seek waivers from its lenders.

The most alarming aspect of the report is the explicit “going concern” warning. This formal accounting declaration signifies that auditors have substantial doubt about the company's ability to meet its financial obligations and continue operations for the next twelve months without drastic intervention. The company's future now hinges on its ability to generate positive cash flow, secure additional financing, and renegotiate its debt—all of which, the report admits, “cannot be guaranteed.”

Crushed by a 45% Tariff Wall

The primary driver of Conifex’s financial distress is the relentless pressure from U.S. trade protectionism. The long-standing softwood lumber dispute between the U.S. and Canada has entered a particularly punitive phase. In 2025, Conifex saw its duty expenses skyrocket by an astonishing 493% to $26.1 million.

This surge was the direct result of two major U.S. trade actions. First, the U.S. Department of Commerce’s sixth administrative review (AR6) finalized in September 2025, hiked the combined countervailing and anti-dumping duty rate from 14.40% to 35.16%. Just weeks later, on October 14, 2025, the U.S. government imposed an additional 10% tariff under Section 232 of the Trade Expansion Act, citing national security concerns. This layered tariff brought the total cost on Conifex's U.S. shipments to a staggering 45.16%.

For a company that sells its products in the U.S., these tariffs act as a massive tax, decimating profit margins and making it nearly impossible to compete. While benchmark lumber prices for Western Spruce-Pine-Fir (WSPF) actually rose 16% in 2025, Conifex noted that these gains were completely erased at the mill level by the duties. The company has paid a cumulative total of US$46.0 million in duties since the dispute began, cash that remains held in trust by the U.S. government pending appeals.

A Desperate Fight for Liquidity

Faced with this existential threat, Conifex management has taken drastic measures. The company significantly curtailed operations at its Mackenzie sawmill in the second half of 2025, reducing production to just 46% of capacity in the fourth quarter. This included running on a single shift and a nearly month-long shutdown at the end of the year to stanch the cash bleed.

On the financial front, the company has been in a desperate race to secure new funding. The $19 million loan from the BDC, provided under the federal Softwood Lumber Guarantee Program, is the most significant achievement. This program was specifically designed by the Canadian government to help companies like Conifex weather the financial storm caused by U.S. tariffs. The loan provides immediate cash flow and helps the company manage its obligations.

Prior to securing the BDC loan, Conifex obtained a $5 million bridge advance from its existing lender, Pender Corporate Bond Fund, in February 2026, highlighting the urgency of its liquidity crunch. These financing maneuvers, coupled with ongoing negotiations with lenders to waive and defer debt payments, represent a full-court press to keep the company solvent.

A Glimmer of Hope Beyond the Sawmill

Amidst the financial turmoil in its core lumber business, Conifex’s bioenergy division has emerged as a resilient and stabilizing force. The company's power plant in Mackenzie, which sells electricity to BC Hydro, generated $25.6 million in revenue in 2025, an 8% increase over the previous year. This diversified revenue stream, insulated from the volatility of lumber markets and trade disputes, provided a much-needed positive contribution.

Looking ahead, the company’s management is holding out hope for a market recovery. The outlook remains fraught with near-term uncertainty, but Conifex points to favourable medium-term fundamentals for the North American housing market. Factors such as an aging U.S. housing stock, a chronic shortage of available homes, and favorable demographics are expected to support lumber demand over the long run.

Management also expressed hope for a “material reduction in duty rates” in late 2026, when the results of the seventh administrative review are expected. In the meantime, the company states it remains focused on stringent cost discipline and liquidity management. For Conifex, the coming year will be a tightrope walk, balancing immediate survival against the hope for a future where it can once again build on solid ground.