CIBC Institutional Investor Conference

Transcription

1 CIBC Institutional Investor Conference January 2016 CANFOR CORPORATION.

2 Forward Looking Statements CIBC Institutional Investor Conference January 2016 Alan Nicholl SVP Finance & CFO Pat Elliott Vice President & Treasurer 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 expressed or implied by such statements. Factors that could have a material impact on any future oriented statements made herein include, but are not limited to: general economic, market and business conditions, product selling prices, raw material and operating costs, foreign exchange rates, interest rates, changes in law and public policy, the outcome of trade disputes, and opportunities available to or pursued by the Company. For further details on these factors and our assumptions and applicable risks and uncertainties, please refer to Canfor Corporation s Annual Report for the year ended December 31, 2013 available at or 2

3 Canfor Corporation CFP

4 Canfor Corporation (CFP) Locations 23 Sawmills 12 in Canada 11 in US 4 Green Energy Plants 3 Engineered Product Mills 2 Chip Plants 4 Pulp Mills / 1 Kraft Paper Mill (integrated) Lumber Capacity: 5.8 billion boardfeet Pulp/Paper Capacity: 1.4 million tonnes NC 2014 Lumber Sales $2.2 Billion United States Asia Canada Other 2014 Pulp Sales $1.1 Billion Americas Asia Europe 4

5 Significant Strategic Upgrades From 2010 to 2015, the Canfor lumber business has invested more than $500 million on high returning strategic capital upgrades in regions and operations with excellent fibre base: Planer Upgrades Energy Systems Productivity Improvements Grade Optimization 5

6 US Expansion Production Mix AR MS IN AL GA SC NC US South British Columbia Alberta TX LA Current Pro-forma FL Southern US 8% 12% 7% 28% Total Capacity: approx. 1.6 billion board feet Strong fibre supply region, high performing operations Significant reinvestment of capital Access to domestic and offshore markets 80% 65% Strategic acquisition total $325 million ( ) 6

7 $ EBITDA / Mfbm Significant EBITDA Improvements: Top Quartile Performance $100 $80 $60 $40 $20 $0 -$20 -$40 Lumber EBITDA per Mfbm (rolling four quarter average) Producer 1 CFP Producer 2 Producer 3 Optimizing top quartile performance at lumber operations - Divested non-core assets, closed fibre-challenged mills Expanded market presence and diversification - Building further value / volume in China and Japan - Pioneering into new markets (e.g. India) Regional performance reflect strong results in all regions - Strong margin focus and quality fiber base in all regions 7

8 Lumber Markets

9 Volume (MMfbm) China Imports (MMfmb) 14,000 12,000 Low Grade, 93% ,000 Source: China Customs 8,000 #2 Grade 7% 6,000 4,000 2, Others New Zealand Indonesia Malaysia Thailand USA Canada Russia #2 Grade 19% Prime 21% Low Grade 59% 2014 Source: China Customs 9

10 US Housing Starts Homeowners Improvements (Billions of $) $133 $132 $139 $146 $143 $141 $145 $151 $147 $146 Rate of Change (%) US Lumber Demand Housing starts not the Only Market to Watch Four-Quarter Moving Total in Billions Four-Quarter Moving Rate of Change 60 US Lumber Demand $160 $150 $140 $ % 2.2% 6.1% 10.0% 7.7% 6.5% 4.3% 3.5% 2.8% 4.0% 10.0% 5.0% 0.0% -5.0% 50 $ % 40 $110 $ % -20.0% R&R Industrial Non-residential Mobile Homes Multi Family Homes Single Family Homes 1,600 1,400 1,200 1, ,250 1,300 1,350 1,

11 Canfor Pulp Products Inc. CFX

12 Pulp Operations Locations Canada BC AB 1 Intercontinental 2 Northwood 3 Prince George 1.2 million tonnes of high quality premium 5 reinforcing pulp and paper 1 4 Taylor End Use 2007 Tissue 30% Commodity 12% 6% 52% 2014 Publishing 45% Specialty 27% 5% 23% Sales America APAC China Europe Japan 6% 15% % % 16% 10% 9% 30% 20% 31% 12

13 Operating Rate for Softwood Pulp Ratio D/C Ratio (Hardwood) D/C Ratio (Softwood) NBSK (right axis) BEK (right axis) $USD/tonne 95% 90% 85% 80% 86% 89% 91% 88% 88% 93% 90% 92% 90% 94% 94% 93% 92% 92% 91% 91% 89% 88% 87% 87% 86% 85% Operating rate projected to come off due to projected capacity additions Historical price premium of $70 for NBSK over eucalyptus; currently near $95/admt Potential risk for softwood pricing to be negatively influenced by falling operating rates %

14 $ EBITDA / tonne Sustained EBITDA Performance Against Peers Pulp EBITDA per admt (rolling four quarter average) $300 $250 $200 $150 $100 $50 $0 -$50 Reinforcing top quartile performance: Ongoing operational excellence focus Energy optimization Enhancing offerings of premium pulp and specialty paper Over $250 million of capital investment since 2010 Producer 1 CFX Producer 2 Producer 3 14

15 Investor Contacts Pat Elliott Vice President & Treasurer Alan Nicholl Senior Vice President, Finance and CEO