Canfor Corporation · TSX:CFP
Canfor — RBC Capital Markets - Paper, Packaging & Forest Products Conference 2010
22 slides from Canfor's conference presentation, Nov 30, 2010
Slide 1: Canfor Corporation
PAGE 1 Canfor Corporation Thomas Sitar – Vice President, Finance and CFO RBC Capital Markets - Paper, Packaging & Forest Products Conference November 30, 2010 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 Statements ► The presentation and answers to questions today contain forward-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 achievements
Slide 3: Locations
PAGE 3 Locations Canfor Operations Sawmills 1 Chetywnd Remanufacture 2 Clear Lake Plywood & OSB 3 Ft. St. John Pulp & Paper 4 Grand Prairie, AB Core Holdings 5 Houston 6 Isle Pierre 15 sawmills in Canada 7 Mackenzie (4.3 BBF) 8 Plateau 4 sawmills in US 9 Polar (0.6 BBF) 10 Prince George 50.2%
Slide 4: Canfor Overview
PAGE 4 Canfor Overview 2009 Revenues ($2.1 billion) Assets ($2.7 billion) 2% 20% Lumber Lumber 43% 48% Pulp 55% Pulp Unallocated Unallocated 32% 2.5 Market Capitalization (billions $) – at November 22/10 2.0 1.5 1.0 0.5 0.0 WFT CFP CPLP NBD TMB IFP C A N F O R C O R P O R A T I O N
Slide 5: Our Markets - Lumber
PAGE 5 Our Markets - Lumber SYP 12% SPF 88% Offshore 26% China 16% Market Focus ► Grow Asian markets US 52% • Expand SPF uses in China Canada 22% ► Grow high value customers • Increase integration with U.S. retail customers • Key Asian customers Represents September 2010 YTD volumes C A N F O R C O
Slide 6: Geographic Market Diversification (SPF only)
PAGE 6 Geographic Market Diversification (SPF only) 2010 Estimate (2.8 Bfbm) 2005 (5.1 Bfbm) Offshore 7% Offshore 26% Canada 14% US 52% US 79% Canada 22% Offshore Markets Offshore Markets China 16 % China 0.3 % Japan 8% Japan 6% Korea/Other Asia 2% Korea/Other Asia 0.7 % C A N F O R C O R P O R A T
Slide 7: North American Supply and Demand - Lumber
PAGE 7 North American Supply and Demand - Lumber New Home R&R Non-Residential Industrial Canada Asia North American Capacity Bbf 90 2004 Average: $517 US Housing Starts 80 (000’s) 2010 – 590 70 2011 – 750 2012 – 950 60 2013 – 1,275 2014 – 1,350 50 40 30 20 10 0 Source: Woodbridge Associates Inc., Co
Slide 8: Product Offerings
PAGE 8 Customer Centric Product Offerings Offshore Home Centre Construction Reman Premium Grade Grade Grade C A N F O R C O R P O R A T I O N
Slide 9: Canfor Lumber to China
PAGE 9 Canfor Lumber to China Mmfbm 900 ► Long term commitment to China 800 ► Building codes are now more 700 conducive to wood frame 600 construction (“WFC”) 500 ► Increasing use of #2&Better 400 grade in emerging WFC housing sector 300 200 100 0 2005 2006 2007 2008 2009 2010 2011F Low Grade #2 & B
Slide 10: Market Price Compression and the "China Effect"
PAGE 10 Market Price Compression and the “China Effect” 450 2,500 450 SPF 2x4 #2&B 400 400 2,000 350 350 SPF 2x4 #2&B in US$ (left axis) 300 300 1,500 250 250 200 200 1,000 SPF 2x4 Utility #3 150 150 100 100 500 50 50 Average excess price of #2&B to Utility #3 in US$: US Housing Starts 000's (right
Slide 11: China – Opportunities
PAGE 11 China – Opportunities • Affordable high density multi-story hybrid dwellings • Residential • Commercial • Public buildings • 6 story & under • Interior / exterior in-fill • Roofs • 7 – 18 story • Interior in-fill walls • Low-density wood frame dwellings • Villas / 2-3 story townhomes • Singl
Slide 12: China – End Uses (Current and Projected)
PAGE 12 China – End Uses (Current and Projected) 2010 2014 10% 19% 30% 21% 20% C A N F O R C O R P O R A T I O N
Slide 13: Canfor Pulp
PAGE 13 Canfor Pulp ► Controlling interest in Canfor Pulp Limited Partnership ► 2010 estimated declared cash distributions of $81 million* ► NBSK pulp markets are currently balanced 2009 ► Low cost mills North America Europe Asia Canfor’s distributions from Canfor Pulp 35% 46% 25 1050 1000 20 19% 95
Slide 14: Leveraged to a Lumber Market Recovery
PAGE 14 Leveraged to a Lumber Market Recovery 2,000 U.S. Housing Starts 1,500 EBITDA Sensitivity (C$ millions) 1,000 500 Full Capacity 0 2011 2012 2013 2014 RISI FEA RJ 500 SPF 2x4 #2&B Price (USD) Current Capacity 400 300 200 0 10 20 30 40 50 100 US$10 Lumber Price Change 0 2011 2012 2013 2014 RISI
Slide 15: Optimistic about the future
PAGE 15 Optimistic about the future ► U.S. lumber market will recover ► Continued growth in Asia ► Constraints facing global fibre supply ► 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 16: Canfor Corporation
PAGE 16 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. These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company
Slide 17: Appendix
PAGE 17 Appendix C A N F O R C O R P O R A T I O N
Slide 18: BC Fibre Outlook – Production Capacity
PAGE 18 BC Fibre Outlook – Production Capacity 70 60 50 40 30 20 70 10 60 0 50 2010 2020 40 30 Pine Spruce/Other Species 20 10 0 2010 2020 Pine Spruce/Other Species 100 80 60 40 20 0 2010 2020 Pine Spruce/Other Species 80 70 60 50 40 30 20 10 0 2010 2020 Pine Spruce/Other Species C A N F O R C O R P
Slide 19: Projected Reduction in British Columbia Harvest Levels
PAGE 19 Projected Reduction in British Columbia Harvest Levels AAC Potential Sawlog Availabiity Million m³ 75 70 65 60 55 50 45 40 35 30 Historic 2010 2012 2014 2016 2018 2020 2022 2024 Source: BC Ministry of Forests. Wood Market – March 2010 British Columbia Eastern Canada • Reduction in sawlog ava
Slide 20: CFP Trading Liquidity
PAGE 20 CFP Trading Liquidity CFP WFT IFP 600,000 500,000 400,000 300,000 200,000 Major Shareholders* 100,000 0 The Pattison Group 35% 2006 2007 2008 2009 2010YTD Jarislowsky Fraser 15% Mackenzie Cundill 14% CFP WFT IFP 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 2006 200
Slide 21: Capital Expenditures
PAGE 21 Capital Expenditures ► 2010 projected capital spend of $95 million: Maintenance capital - $20 million ► 2011 projected capital spend - $140 million Mill modernization and cost reduction Improvement projects have a high ROI (+ 20%) 400 350 300 250 200 150 100 50 0 2005 2006 2007 2008 20
Slide 22: Capitalization and Liquidity (as at September 30, 2010)
PAGE 22 Capitalization and Liquidity (as at September 30, 2010) Long Term Debt $ Millions Liquidity $ Millions Senior Unsecured Notes 8.03% 2011 32 Syndicated credit facility Oct 2013 350 Senior Unsecured Notes 6.18% 2011 52 Other credit facilities 2011/12 48 Senior Unsecured Notes 6.33% 2012 52 Out
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