Slide 1: Canfor Corporation / Canfor Pulp Products Inc.
Canfor Corporation Canfor Pulp Products Inc. C A N F O R C O R P O R A T I O N
Slide 2: Forward Looking Statements
Forward Looking Statements The presentation and answers to questions today contain forward forward‐looking looking statements which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achiev
Slide 3: Canfor Corporation (CFP)
Canfor Corporation (CFP) C A N F O R C O R P O R A T I O N Page 3
Slide 4: Who We Are
Wh W Who We A Are • 2nd largest global producer of softwood lumber • 50.2% 50 2% owner of Canfor Pulp Products Inc Inc. • Builder of market demand in the world’s fastest‐growing economies • Company with a strong reputation for quality, quality customer service and excellence in logistics support • S
Slide 5: Key Facts
Assets ($2.5 billion) 2012 Annualized Revenues ($2.7 billion) As at Sep 30, 2012 7% 3% Lumber Lumber 32% Pulp and Paper 35% 62% Pulp and Paper 61% Panels and Other Panels and Other Annualized based on 2012 year to date through Q3 Key Facts Market Capitalization (billions $) 3.0 As at October 2012 •
Slide 6: Overview
Overview • US market demand slowly recovering, reflecting improved housing prices, pent up demand and falling unemployment; Canadian market continues to be steady and strong • China shipments have increased in volume and value for 2012, despite the ggeneral economic slowdown;; Japan p demand for the
Slide 7: U.S. Housing Starts Forecast
U.S. Housing Starts Forecast (Thousands of Units) 1,600 1,500 Single Family Multifamily Forecasts (000) 2012 2013 1,400 1,330 Moody’s Analytics-Oct 9 800 1,100 1,200 Mesirow Financial Financial- Oct 11 750 980 1 100 1,100 938 RBC-Sep 18 750 922 1,000 872 Mortgage Bankers-Sep 18 756 898 800 NAHB- Oct
Slide 8: BC Production & Exports – All Species
BC Production & Exports – All Species Bfbm US China Other Exports Canada 20 • Current production at 17.4 18 74% of 2006 levels 16 3.5 • Significant growth in 14 offshore shipments partly 12.8 offsetting weaker US 12 2.7 demand 0.2 2.7 10 • Fibre constraints are 18 1.8 8 projected to limit future inc
Slide 9: North American Lumber Production versus Theoretical Capacity
North American Lumber Production versus Th Theoretical ti l C Capacity it P/C Ratio (%) 2012 2013 2014 2015 2016 2017 RBC 75 81 88 96 102 - RISI 72 78 84 89 83 86 FEA 76 79 84 89 93 91 Bfbm Capacity Production P/C Ratio (R) Ratio 90 100% 92% 92% 93% 91% 91% 90% 91% 89% 89% 89% 80 90% 82% 84% 70 79%
Slide 10: Sales Regions
Sales Regions Canfor is aggressively building demand in the world’s fastest growing economies, while maintaining our commitment to our valued customers. • North N hA America: i US market k continues i to b be our llargest, representing i 45% off SPF sales; l Market M k demand and pricing are improvi
Slide 11: Green Operations and Fibre
Green Fibre O Operations ti and d Fib Fibre • Strong, sustainable fibre supply Customer Fibre • Fibre base supports our customer Strategy Supply focused strategy • Well capitalized mills in regions minimally impacted by mountain pine beetle • Acquisition of Tembec tenure strengthens fibre security (
Slide 12: In Summary - CFP
I S In Summary - CFP • Improving demand signals in existing and emerging markets • Canfor has aggressive and proven program of building markets markets, recognition of our products around the world • Canfor well positioned to meet increasing global demand for premium products: • High quality, secure
Slide 13: Canfor Pulp Products Inc. (CFX)
Canfor Pulp Products Inc. (CFX) C A N F O R C O R P O R A T I O N Page 13
Slide 14: Canfor Pulp Overview
Canfor Pulp Overview • 3 ffacilities iliti located l t d in i close l proximity i it within ithi Prince Pi George, G BC • Well capitalized mill operations with stable, low cost fibre supply • Significant recent capital investment (≈$200M) preserving top quartile performance • Mills currentlyy runnin
Slide 15: Softwood Operating Rates Forecast to Remain Favourable
Softwood Operating Rates Forecast to Remain Favourable Softwood Op S Operating g Rates s 30 000 98.0% 96 0% 96.0% 25 000 ds of tonnes 94.0% 20 000 pacity in thousand 92.0% 15 000 Balanced Market 90.0% od demand & cap 10 000 88.0% Global softwoo 5 000 86.0% 0 84.0% 2004 2005 2006 2007 2008 2009 2010
Slide 16: Diversified Customer Base
Diversified Customer Base ► Targeting customers that need reinforcing pulp 2012 End Uses • Specialty Commodity 4% • Décor, Masking tape base, Abrasive backing, Labels Tissue • Publishing 23% Publishing • Magazines / Catalogues 23% • Tissue Specialty 50% • Branded top quality lightweight tissue • Com
Slide 17: Recent Changes to Corporate Structure
Recent Changes g to Corporate p Structure • Canfor Corporation (“CFP”) converted its 50.2% interest in Canfor Pulp Limited Partnership to 50.2% of the shares of PUBLIC Canfor Pulp Products Inc. (“CFX”), in CANFOR SHAREHOLDERS CANFOR PULP March 2012 INOME CORPORATION “CFP” • Tax benefits from partner
Slide 18: In Summary - CFX
I S In Summary - CFX • Softwood pulp markets projected to remain below balanced levels over the next 2 years • Continued focus on development and expansion of premium product markets • Low cost mill operations will be competitive throughout the cycle, boosted by recent capital spending; future capex
Slide 19: Investor Contacts
These materials have been prepared by Management of the Company. No regulatory authority has approved or disapproved of the contents of these materials. These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company and shall not constitute an
Slide 20: Capitalization and Liquidity (CFP)
Capitalization and Liquidity (CFP) Liquidity $ Millions Long Term Debt $ Millions Senior Unsecured Notes 5.42% 2013 75 Syndicated credit facility Oct 2015 350 Non Revolving Term Debt Floating 2017 100 Outstanding Letters of Credit (18) Total Debt 175 Operating Loans (13) Operating Loans (13) Net Liq
Slide 21: Capitalization and Liquidity (CFX)
Capitalization and Liquidity (CFX) Liquidity $ Millions Long Term Debt $ Millions Senior Unsecured Notes 6.41% 2013 110 Syndicated credit facility Nov 2016 110 Total Debt 110 BC Hydro Credit Facility 10 Operating Loans (11) Outstanding Letters of Credit (11) 382.7 Shareholders’ Equity Operating Loan