Slide 1: Canfor Corporation
PAGE 1 Canfor Corporation Don Kayne, President and Chief Executive Officer C A N F O R C O R P O R A T I O N
Slide 2: Forward Looking Statements
PAGE 2 Forward Looking g 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, performanc
Slide 3: Canfor Operations
PAGE 3 Canfor Operations p 1 Locations Chetywnd 2 Ft. St. John 3 Grand Prairie, AB 4 Houston Core Holdings g 5 Isle Pierre 9 6 Mackenzie 14 sawmills in Canada 26 7 Plateau (4.3 Bfbm) 8 Polar 4 sawmills in US (0.6 9 Prince George Bfbm) 22 25 24 10 Quesnel 50.2% 50 2% interest in Canfor 21 11 Ra
Slide 4: Canfor Southern Operations – Southern Yellow Pine
PAGE 4 Canfor Southern Operations – Southern Yellow Pine • 600 million board feet of capacity • Strong management team • Excellent fibre supply • Modern facilities • Traditional thinking has led to highly regional markets • Creating C ti new opportunities t iti tto diversify our markets C A N F O R
Slide 5: Canfor Overview
PAGE 5 Canfor Overview 2010 Revenues ($2.4 billion) Assets ($2.8 billion) Lumber Lumber Pulp Pulp Panels and Panels and Other Other Market Capitalization (billions$) 2.5 2.0 1.5 1.0 0.5 0.0 CFP/CFX WFT NBD TMB IFP C A N F O R C O R P O R A T I O N
Slide 6: Capital Expenditures
PAGE 6 Capital Expenditures ► 2010 capital spend of $90 million: Maintenance capital - $25 million ► 2011 projected capital spend - $140 million (part of 3 year/ $300 million program) Mill modernization and cost reduction Improvement projects have a high ROI (+ 20%) Announced $62 million in
Slide 7: Fort St. John Upgrade
PAGE 7 Fort St. John Upgrade pg • $45 million project, completed in 2011 • Rebuild of portions of sawmill and planer to increase grade recovery, productivity and to reduce costs • Increase in capacity from 220 t 300 million to illi bboardd ffeett • Top quartile mill with assured green fibre supply C
Slide 8: Our Markets - Lumber
PAGE 8 Our Markets - Lumber SYP SYP 12% US 100% SPF 88% Offshore SPF 36% Market Focus China 27% ► Grow Asian markets • Expand p SPF uses in China Canada ► Grow high value customers 18% • Increase integration with U.S. retail customers US 46% • Key K A Asian i customers t Represents 2011 Q1 volumes C
Slide 9: Product Offerings
PAGE 9 Customer Centric Organization Product Offerings Offshore Home Centre Construction Reman Premium Grade Grade Grade C A N F O R C O R P O R A T I O N
Slide 10: North America
PAGE 10 North America • Focus on repair and remodel and pro dealer markets • 45% of total SPF sales for 2011 are destined for the U.S. • Key customer relationships provide broad market diversification • Significant integration with customers • Multi-story/multi-family M lti t / lti f il and d non- r
Slide 11: Japan
PAGE 11 Japan p • Traditional market in 2x4 house construction for our highest value lumber • New opportunities in post and beam market ((EWP & J-Grade)) • Tsunami rebuild will increase demand in 12-18 months Market Breakdown 3% 21% 2x4 House Construction Post and Beam 76% Pre-Fabrication C A N F O
Slide 12: China
PAGE 12 China Mmfbm 900 800 700 600 500 400 ► Long term commitment to China 300 ► Building codes are now more 200 conducive d i tto wood d fframe 100 construction (“WFC”) 0 ► Establishing 2 x 4 for the 2005 2006 2007 2008 2009 2010 2011F emerging WFC housing sector Low Grade #2 & Better C A N F O R
Slide 13: China – Moving up the Value Chain
PAGE 13 China – Moving up the Value Chain 2011E 2013E Wood Frame Construction 2% 8% • Single family rural • Multi-family 6-storey Increase In Hybrid Construction – Infill Walls & Interior Partitions Wood Truss Replacement n Value Wood Products Remanufacturing 49% 51% • Specialty products • Engineere
Slide 14: China's Rapid Urbanization
PAGE 14 China’s Rapid p Urbanization Shift to Urbanization • From 2000 to 2010, ~ 218 million people moved from rural to urban area • By 2025, urban population will represent 62 % of China’s population 1000 70% By 2025, China will have… 221 900 % of Urbanization 57% 60% 62%63% 60% Urban Cities 800 R
Slide 15: Market Pricing - The China Effect
PAGE 15 Market Pricing - “The The China Effect Effect” 450 2,500 400 2,000 350 SPF 2x4 #2&B in USD (left axis) 300 1,500 250 200 1,000 150 US Housing Starts 000's (right axis) 100 500 50 0 0 Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 C A N F O R C O R P O R A T I O N
Slide 16: Freight Advantage - Asia
PAGE 16 Freight Advantage - Asia O Edmonton Ed t # of Containers 12,500 12,500 11,000 Prince George Prince 4,881 3 100 3,100 3,750 3,750 Rupert 1,802 863 84 2009 2010 2011 2012 2013 Forcast Forecast Forecast Source: Costco 2011 Growth Forecast •Strategic location as closest Canadian port to Asia • P
Slide 17: Green Building Focus
PAGE 17 Green Building Focus • Planted 30 million trees in 2010 2010, ttwice ice the n number mber harvested • Signatory to the Canadian Boreal Forest Agreement • 97% of our annual allowable cut is certified under the Canadian Standards Association for Sustainable Forest Management • Committed to be
Slide 18: BC Fibre Outlook – Production Capacity
PAGE 18 BC Fibre Outlook – Production Capacity p y 70 Capacity p y = 1,300Mfbm , 60 50 Fort St. John 40 70 30 60 20 50 10 40 0 30 2010 2020 20 10 Pine Spruce/Other p Species p Houston 0 2010 2020 Pine Spruce/Other Species Prince George 100 Capacity = 1,000Mfbm 80 60 40 Capacity = 1,500Mfbm 20 0 2010
Slide 19: Long Term Outlook – Lumber Markets
PAGE 19 Long Term Outlook – Lumber Markets New Home R&R Non-Residential Industrial Canada Asia North American Capacity Bbf 90 Operating Rate: 95%, Average Price: C$517 Operating Rate: 93%, Average Price: ? 80 70 O Operating ti Rate: R t 60%, 60% AAverage P Price: i C$205 US Housing Starts 60 (000’s)
Slide 20: Canfor Pulp
PAGE 20 Canfor Pulp ► Controlling g interest in Canfor Pulp p Limited Partnership p ((50.2%)) ► 2010 declared cash distributions of $92 million ► NBSK pulp markets remain tight (high prices) North America Europe Asia CAD millions$ Canfor’s distributions from Canfor Pulp US$/ADMT 37% 40 1050 45% 35 1
Slide 21: Optimistic about the Future
PAGE 21 Optimistic about the Future • U S llumber U.S. b market k t will ill recover • Continued growth in Asia • Significant increased demand for Green Building Products • Improving lumber prices • Supply/Demand metrics point to lumber shortage in the future C A N F O R C O R P O R A T I O N
Slide 22: TSX:CFP Canfor Corporation
PAGE 22 Canfor Corporation These materials have been prepared by Management of the Company. No regulatory authority has approved or disapproved of the contents of these materials materials. These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of th
Slide 23: Appendix
PAGE 23 Appendix C A N F O R C O R P O R A T I O N
Slide 24: Leveraged to a Lumber Market Recovery
PAGE 24 Leveraged to a Lumber Market Recovery 2,000 EBITDA Sensitivity ($ millions) US Housing Starts 1,500 1,000 April 2011 Full Capacity 500 0 2011 2012 2013 2014 RISI FEA RJ 500 SPF 2x4 #2&B Price (USD) Current Capacity 400 300 Q1.11 Average 200 100 0 10 20 30 40 50 0 US$10 Lumber Price Change 20
Slide 25: Capitalization and Liquidity (as at April 11, 2011)
PAGE 25 Capitalization and Liquidity (as at April 11, 2011) All information excludes CPLP Long Term Debt $ Millions Liquidity $ Millions Senior Unsecured Notes 6.33% 2012 50 Syndicated credit facility Oct 2013 350 Senior Unsecured Notes 5.42% 2013 75 Other credit facility Jan 2012 12 Total Debt 125
Slide 26: CFP Trading Liquidity
PAGE 26 CFP Trading Liquidity Average Daily Trading Volume (in shares) CFP WFT IFP 600,000 500,000 400,000 300,000 Major Shareholders* 200,000 100,000 The Pattison Group 36% 0 Mackenzie Cundill 14% 2006 2007 2008 2009 2010 Average Daily Trading Value (in $) Jarislowsky Fraser 12% CFP WFT IFP * As pe
Slide 27: US Employment will drive US Housing Starts
PAGE 27 US Employment p y will drive US Housing g Starts Housing Starts - Thousands (left axis) Total Non Farm Payrolls - millions (right axis) 2,500 140 138 2,000 136 134 1,500 132 130 1 000 1,000 128 126 500 124 122 0 120 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
Slide 28: Housing Inventory Overhang
PAGE 28 Housing g Inventory y Overhang g - U.S. Vacant Units Total Vacancies (millions) Percentage of Total Housing Inventory (right axis) 20 16% 18 14% 16 12% 14 10% 12 10 8% 8 6% 6 4% 4 2% 2 0 0% Q2.00 Q2.01 Q2.02 Q2.03 Q2.04 Q2.05 Q2.06 Q2.07 Q2.08 Q2.09 Q2.10 C A N F O R C O R P O R A T I O N