Canfor Corporation · TSX:CFP
Canfor — CIBC World Markets Conference 2006
34 slides from Canfor's conference presentation, Feb 15, 2006
Slide 1: Canfor Corporation CIBC World Markets Conference
Canfor Corporation CIBC World Markets Conference Canfor Prince George Operations Tour February 15, 2006 Forward-Looking Statement Disclaimer Certain statements in this presentation, including statements regarding future results and performance, are forward-looking statements based on current expecta
Slide 2: Prince George Sawmill
C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour Prince George Sawmill Randy Kubbernus - Plant Manager February 15, 2006 JAN15A PAGE 1 Prince George Sawmill ! Built in 1970 ! Acquired by Canfor in 1999 ! Union plant – IWA – 245 hourly – 25
Slide 3: Safety Performance; Prince George Sawmill
Safety Performance Medical Incident Rate 10 7.88 8 5.65 6 5.57 4.74 4 3.28 2 0 2002 2003 2004 Jun-05 2006 Plan JAN15A PAGE 3 CANFOR CORPORATION Prince George Sawmill ! 3rd Shift Operation ! Annual Production capacity – 2003 - 212,000 Mfbm – 2005 - 319,000 Mfbm – 2006 - 359,000 Mfbm – 69% Increase 20
Slide 4: 2004 Capital Expansion
2004 Capital Expansion ! Increase lumber recovery ! Reduce production costs ! Increase volume - key SE/MSR supplier ! Improve quality ! Improve Optimization JAN15A PAGE 5 CANFOR CORPORATION Optimization ! Assures the highest value decisions ! Enables a consistent product ! Meets customer grade requi
Slide 5: PG Sawmill Example - Sawmill
PG Sawmill Example - Sawmill ! Canters - Optimization JAN15A PAGE 7 CANFOR CORPORATION PG Sawmill Example - Sawmill ! Edgers - Optimization JAN15A PAGE 8 CANFOR CORPORATION Prince George Sawmill 4
Slide 6: 2003/2004 Capital Expansion
PG Sawmill Example - Planer ! Grade Scanner – Planer Wane Optimization JAN15A PAGE 9 CANFOR CORPORATION 2003/2004 Capital Expansion Sawmill 4th Qtr 2003 $10,768 $ 000’s ! USNR Canter line and COE vertical shape saw gang ! Porter RT3 scanning on both sawmill lines ! Trimmer/Sorter conversion ! 2nd Ed
Slide 7: 2005 Capital Expansion
2005 Capital Expansion Canter Infeed Storage Decks ! Increase log throughput Metal Detectors @ Barkers ! High metal content in purchased log volume Rail Line Extension ! New Us Markets Total Capital Spent: $2,600 JAN15A PAGE 11 CANFOR CORPORATION 2005 Capital Expansion CTL Upgrade ! Improve Operatin
Slide 8: Progress on KPIs
Progress on KPI’s 2006 KPI 2003 2004 2005 Plan Sawmill production Mfbm/hr 53.1 50.1 58.3 64 Planer production Mfbm/hr 36.4 50.8 64 67 LRF Fbm/m3 264 272 271 285 Production/ Mfbm/hr 475 555 629 668 Manhour 2 & btr % 89.3 85.4 84.7 84.8 JAN15A PAGE 13 CANFOR CORPORATION North Central Plywoods Question
Slide 9: Canfor Corporation
C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour Prince George Sawmill Randy Kubbernus - Plant Manager February 15, 2006 JAN15A PAGE 15 Prince George Sawmill 8
Slide 10: Northwood: Vision
C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour Northwood Pulp Presented by Dan Brinson General Manager Northwood Pulp Mill February 15, 2006 JAN15B PAGE 1 Northwood: Vision ! Our objective is to be a low cost producer of the most consiste
Slide 11: Northwood: Processes
Northwood: Processes "A" Line Chips Mini O2 Tube Pressure Pulp Diffuser D0 Eop D1 Ep D2 Pulp Storage Storage Knotters Pressure Wash Press 6 Stage Screens Cleaners Brownstock Slusher Pulp Kamyr Pulp Washers Pulp Decker Pulp Dryer 5 Stage Bleach Plant Decker Pulp Machine Digester Storage Storage Stora
Slide 12: Northwood: Opportunities/Outlook
Northwood: Opportunities/Outlook ! Production: – forecast record performance levels for 2006, due to full year benefit of #5 Recovery boiler upgrade at Northwood. – Improved productivity due to reliability focus. ! Financials: – Full year benefit of new chip pricing formula implemented July 1, 2005.
Slide 13: Northwood: Competitiveness
Northwood: Competitiveness ! Top quartile, PWC 2004 Survey results – Canadian mills: – Production and sales volumes – Total costs – Operating earnings ! Competitive advantage: – Economies of scale – Fibre costs JAN15B PAGE 7 CANFOR CORPORATION Northwood: Safety Medical Incident frequency 8.00 6.00 4
Slide 14: Northwood: Production and Capex
Northwood: Production 600 580 1,600 Tonnes per Day 560 M tonnes 540 1,500 520 500 1,400 2003 2004 2005 2006 Plan Tonnes Tonnes per Day JAN15B PAGE 9 CANFOR CORPORATION Northwood: Capex Reduce shives to $12,000 B Bleach - $1.8 mm $10,000 Upgrade Recovery Boilers $3.4mm $8,000 $5,472 $2,003 $3,894 $(0
Slide 15: Questions?
The End Questions? JAN15B PAGE 11 CANFOR CORPORATION C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour Northwood Pulp Presented by Dan Brinson General Manager Northwood Pulp Mill February 15, 2006 JAN15B PAGE 12 Northwood Pulp 6
Slide 16: The Mountain Pine Beetle Epidemic in Central BC
C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour PG Woodlands - Mountain Pine Beetle Presentation David I. Bryden – Woodlands Manager February 15, 2006 JAN15A PAGE 1 The Mountain Pine Beetle Epidemic in Central BC Prince George Woodlands -
Slide 17: Agenda
Agenda ! PG Division & Fibre Supply ! Mountain Pine Beetle Infestation (MPB) Facts & Figures ! Mountain Pine Beetles – Life Cycle – Biology – Population Dynamics – Natural Controls ! PG Division Response to MPB ! Timber Supply Impacts of MPB ! Summary JAN15A PAGE 3 CANFOR CORPORATION Canfor Operatio
Slide 18: Canfor Operations and Tenure in the Prince George Area
Canfor Operations and Tenure in the Prince George Area JAN15A PAGE 5 CANFOR CORPORATION Prince George Division Manufacturing Plants ! 4 Sawmills – Prince George, Rustad, Polar, Clear Lake – Combined annual capacity – 1,175,000,000 FBM of SPF dimension lumber & studs ! About 20% of Canfor’s lumber ca
Slide 19: Prince George Division Fibre Supply
Prince George Division Fibre Supply ! Consume 4,800,000 m3 per year in 5 wood product manufacturing plants ! 2,900,000 m3 (62%) from Canfor Timber licenses on crown land on 10,000 hectares, ! 1,900,000 m3 (38%) purchased from: – BC Timber Sales - 50%; Other licensees – 10%; Woodlots – 32%; Private L
Slide 20: Mountain Pine Beetle: Infestation Facts & Figures
Mountain Pine Beetle: Infestation Facts & Figures ! Largest forest health epidemic in recorded Canadian history – started about 1994 ! 411 million m3 over 15 million hectares – 7.5 times the area of Vancouver Island ! 60% increase in volume attacked over 2004 – Additional 128 million m3 and 3 millio
Slide 21: Mountain Pine Beetle: Biology
Mountain Pine Beetle: Biology ! Lives in lodgepole pine trees (host) – Approximately 40% of mature timber in the BC Interior is lodgepole pine ! Adult carries a fungus & constructs galleries – Combination of the galleries & fungus prevent water and nutrients moving through the tree – Sap wood stains
Slide 22: Mountain Pine Beetle: Population Dynamics
Mountain Pine Beetle: Population Dynamics ! Clusters of MPB-attacked trees develop in mature lodgepole pine stands (epi-centres) ! Emerging beetles fly to the nearest suitable host tree – Up to 2 km within the canopy or – Up to 30 km away if in the upper winds ! Emerging beetles from one host tree w
Slide 23: Mountain Pine Beetle: PG Division Response
Mountain Pine Beetle: PG Division Response ! Moved harvest to MPB attacked timber stands – Maximize harvest in trees hosting beetles – 85 % of 05 / 06 PG Division harvest in MPB attacked stands – Leave non-target species for mid-long term timber supply – Delivery of MPB infested wood to mills outsid
Slide 24: Future Impact on AAC
Future Impact on AAC ! Increased harvest and non-salvaged losses due to MPB will reduce the short term (10 – 20 years) timber supply ! AAC levels will drop to below “Pre-Beetle” AAC levels 10 to 15 years from now ! Long term effects (>20 years) will depend on: – Extent of unsalvaged losses and the a
Slide 25: Timber Volume Available
Timber Volume Available PG TSA Green Harvestable Volume 800 700 600 Million m3 500 400 720 300 434 200 260 226 100 200 124 110 50 104 80 0 Pine Spruce Balsam D. Fir Total 2004 2015 JAN15A PAGE 19 CANFOR CORPORATION Shelf Life Definition: The length of time a tree is useable for a given product. “Use
Slide 26: Summary
Summary ! Current timber supply is significantly above historic levels and is providing opportunities for the forest industry ! Timber supply will decrease 10 – 15 years from now ! The magnitude of the decrease will depend upon: – Future expansion of the MPB epidemic – Other forest health issues – S
Slide 27: Canfor Corporation
C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour PG Woodlands - Mountain Pine Beetle Presentation David I. Bryden – Woodlands Manager February 15, 2006 JAN15A PAGE 23 Prince George Woodlands - MPB 12
Slide 28: North Central Plywoods
C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour North Central Plywoods Rick Reinbolt - General Manager, North Central Plywoods February 15, 2006 JAN15D PAGE 1 North Central Plywoods ! History – Plant built in late 1960’s – Sold to Northwoo
Slide 29: Equipment; Products
Equipment ! Annual Production – 185,000 Msf3/8 ! Single Line Mill – Barker/Slasher Deck – Single Lathe – 3 Veneer Dryers – GP Lay-up Line with Foam Glue – 52 Opening Press – Finishing Line – Synthetic Putty Patch – 4 Head Sander – Tongue & Groove Profiler JAN15D PAGE 3 CANFOR CORPORATION Products !
Slide 30: Markets; Safety
Markets Canada 79% Japan 3% US 18% * No trade restrictions on Plywood Sales to the US JAN15D PAGE 5 CANFOR CORPORATION Safety 14 12 11.2 10 6.9 8 6 3.8 4 2.2 2 0 2002 2003 2004 2005 Medical Incident Rate FIAS Industry Ave. JAN15D PAGE 6 CANFOR CORPORATION North Central Plywoods 3
Slide 31: Production; Key Stats
Production Daily Production 780 ! Compressed weekend dryer 760 shift started in 2001 740 ! Continued focus on Dryer 720 Efficiency 700 ! Reduce Press times on some 680 lay-ups 660 ! Green Veneer Purchases 640 620 ! Press Hydraulic upgrade in 2004 600 2006 2000 2001 2002 2003 2004 2005 BP Msf3/8/day
Slide 32: Business Vision
Business Vision Upgrade specific key components of operation to maximize asset utilization ! Lathe and Veneer Line – Replace Log Loader, XY Charger, Backup Roll, Nose Bar – Upgrade XY Scanner, Tray System, Lathe Drive Motor and Controls – Complete new Veneer Line Controls ! Increase Drying Capacity
Slide 33: Strengths
Strengths ! Employees – Dedicated, experienced and safety conscious work force ! Fibre – Best fibre basket in the world, particularly Douglas Fir ! Market – Industrial market base growing – Not in competition with OSB ! Location – Located right on central railway spurt in the CNR site – Located amon
Slide 34: Canfor Corporation
C O R P O R A T I O N C A N F O R Canfor Corporation CIBC World Markets Conference Canfor PG Operations Tour North Central Plywoods Rick Reinbolt - General Manager, North Central Plywoods February 15, 2006 JAN15D PAGE 13 North Central Plywoods 7