Embed Size (px)
Citation preview
PAGE 1
C A N F O R C O R P O R A T I O N
Canfor Corporation
Thomas Sitar – Vice President, Finance and CFORBC 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
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 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, 2009 available at www.canfor.com or
www.sedar.com.
C A N F O R C O R P O R A T I O N
PAGE 3
Canfor Operations Sawmills
Remanufacture
Plywood & OSB
Pulp & Paper
Core Holdings
15 sawmills in Canada (4.3 BBF)
4 sawmills in US (0.6 BBF)
50.2% interest in Canfor Pulp (3 BC interior pulp mills -1 million admt)
Non Core Holdings
50% interest -Peace Valley OSB plant
2 panel plants in BC –OSB & plywood
1 BCTMP pulp mill in BC
Locations
1 Chetywnd
2 Clear Lake
3 Ft. St. John
4 Grand Prairie, AB
5 Houston
6 Isle Pierre
7 Mackenzie
8 Plateau
9 Polar
10 Prince George
11 Quesnel
12 Radium
13 Rustad
14 Vavenby
15 Daaquam, QC
16 Darlington, SC
17 Graham, NC
18 Conway, SC
19 Camden, SC
20 Marion, SC
21 Bellingham , WA
22 Tackama
23 PolarBoard
24 Peace Valley
25 Intercontinental
26 Prince George
27 Northwood
28 Taylor
C A N F O R C O R P O R A T I O N
PAGE 4
Canfor Overview
55%43%
2%
Lumber
Pulp
Unallocated
48%
32%
20%Lumber
Pulp
Unallocated
0.0
0.5
1.0
1.5
2.0
2.5
WFT CFP CPLP NBD TMB IFP
Market Capitalization (billions $) – at November 22/10
2009 Revenues ($2.1 billion) Assets ($2.7 billion)
C A N F O R C O R P O R A T I O N
PAGE 5
Our Markets - Lumber
Market Focus
► Grow Asian markets
• Expand SPF uses in China
► Grow high value customers
• Increase integration with U.S.
retail customers
• Key Asian customers
Canada22%
US 52%
Offshore26%
SPF88%
SYP 12%
Represents September 2010 YTD volumes
China
16%
C A N F O R C O R P O R A T I O N
PAGE 6
Geographic Market Diversification (SPF only)
US 52%
Canada 22%
Offshore 26%
China 16 %
Japan 8%
Korea/Other Asia 2 %
Offshore Markets
2010 Estimate (2.8 Bfbm)
US 79%
Canada14%
Offshore7%
2005 (5.1 Bfbm)
China 0.3 %
Japan 6%
Korea/Other Asia 0.7 %
Offshore Markets
C A N F O R C O R P O R A T I O N
PAGE 7
North American Supply and Demand - Lumber
0
10
20
30
40
50
60
70
80
90
New Home R&R Non-Residential Industrial Canada Asia North American Capacity
Source: Woodbridge Associates Inc., Company Estimates, USDA
Capacity growth rate estimated at 2.2% based on historic figures
Bbf
US Housing Starts
(000’s)
2010 – 590
2011 – 750
2012 – 950
2013 – 1,275
2014 – 1,350
2004 Average: $517
C A N F O R C O R P O R A T I O N
PAGE 8
Customer Centric
Offshore
Premium
Home Centre
Grade
Construction
Grade
Reman
Grade
Product Offerings
C A N F O R C O R P O R A T I O N
PAGE 9
Canfor Lumber to China
► Long term commitment to China
► Building codes are now more
conducive to wood frame
construction (“WFC”)
► Increasing use of #2&Better
grade in emerging WFC housing
sector
Mmfbm
0
100
200
300
400
500
600
700
800
900
2005 2006 2007 2008 2009 2010 2011F
Low Grade #2 & Better
C A N F O R C O R P O R A T I O N
PAGE 10
Market Price Compression and the “China Effect”
-
50
100
150
200
250
300
350
400
450
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
SPF 2x4 #2&B
SPF 2x4 Utility #3
Average excess price of #2&B to Utility #3 in US$:
10 year average: $68
2010 average $34
0
500
1,000
1,500
2,000
2,500
0
50
100
150
200
250
300
350
400
450
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
SPF 2x4 #2&B in US$ (left axis)
US Housing Starts 000's (right axis)
C A N F O R C O R P O R A T I O N
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• Single family / farm houses• Resort homes
Why?• Senior government support• Competitive with concrete• Building codes in place • Quality assurance• Seismic performance• Green housing / carbon reduction
C A N F O R C O R P O R A T I O N
PAGE 12
China – End Uses (Current and Projected)
2010
10%
30%
20%
21%
19%
2014
C A N F O R C O R P O R A T I O N
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
► Low cost mills
600
650
700
750
800
850
900
950
1000
1050
0
5
10
15
20
25
Q1.08 Q2.08 Q3.08 Q4.08 Q1.09 Q2.09 Q3.09 Q4.09 Q1.10 Q2.10 Q3.10
Cash Distributions NBSK Pulp Average del. U.S. Price (right axis)
Canfor’s distributions from Canfor Pulp 35%
19%
46%
North America Europe Asia
21%
29%30%
20%
Tissue P&W Specialty Commodity
* Assumes current monthly distribution of $0.25 continues for the remainder of 2010
2009
C A N F O R C O R P O R A T I O N
PAGE 14
Leveraged to a Lumber Market Recovery
0
500
1,000
1,500
2,000
2011 2012 2013 2014
RISI FEA RJ
U.S. Housing Starts
0
100
200
300
400
500
2011 2012 2013 2014
RISI FEA RJ
SPF 2x4 #2&B Price (USD)
0 10 20 30 40 50
Current Capacity
Full Capacity
US$10 Lumber Price Change
EBITDA Sensitivity (C$ millions)
C A N F O R C O R P O R A T I O N
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
PAGE 16
Canfor Corporation
TSX:CFP
www.canfor.com
Contacts:
Thomas Sitar – VP Finance and CFO Patrick Elliott - Treasurer
604 661 5487 604 661 5441
[email protected] [email protected]
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 offer, solicitation or sale
of the Company’s securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Securities of the Company may not be offered or sold in the United States absent their prior registration or
qualification or an applicable exemption from the applicable registration or qualification requirements.
PAGE 17
C A N F O R C O R P O R A T I O N
Appendix
C A N F O R C O R P O R A T I O N
PAGE 18
BC Fibre Outlook – Production Capacity
0
10
20
30
40
50
60
70
2010 2020
Pine Spruce/Other Species
0
10
20
30
40
50
60
70
2010 2020
Pine Spruce/Other Species
0
20
40
60
80
100
2010 2020
Pine Spruce/Other Species
0
10
20
30
40
50
60
70
80
2010 2020
Pine Spruce/Other Species
C A N F O R C O R P O R A T I O N
PAGE 19
Projected Reduction in British Columbia Harvest Levels
British Columbia• Reduction in sawlog availability due to Mountain Pine Beetle
epidemic• Projected sawlog availability is 20 -35% less than AAC
Eastern Canada• Expecting lumber production to fall by 35% from 2010 to
2014 due to lower harvest level & downturn in pulp/newsprint industry
Source: BC Ministry of Forests. Wood Market – March 2010
30
35
40
45
50
55
60
65
70
75
Historic 2010 2012 2014 2016 2018 2020 2022 2024
Million m³
AAC Potential Sawlog Availabiity
C A N F O R C O R P O R A T I O N
PAGE 20
CFP Trading Liquidity
0
100,000
200,000
300,000
400,000
500,000
600,000
2006 2007 2008 2009 2010YTD
CFP WFT IFP
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2006 2007 2008 2009 2010YTD
CFP WFT IFP
Major Shareholders*
The Pattison Group 35%
Jarislowsky Fraser 15%
Mackenzie Cundill 14%
C A N F O R C O R P O R A T I O N
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%)
0
50
100
150
200
250
300
350
400
2005 2006 2007 2008 2009 2010E 2011E
C A N F O R C O R P O R A T I O N
PAGE 22
Capitalization and Liquidity (as at September 30, 2010)
Long Term Debt $ Millions
Senior Unsecured Notes 8.03% 2011 32
Senior Unsecured Notes 6.18% 2011 52
Senior Unsecured Notes 6.33% 2012 52
Senior Unsecured Notes 5.42% 2013 78
Total 214
Cash 196
Shareholders’ Equity 1,444
Net Debt to Total Capitalization 1%
Liquidity $ Millions
Syndicated credit facility Oct 2013 350
Other credit facilities 2011/12 48
Outstanding Letters of Credit (18)
Cash balance 196
Net Liquidity 576
