Canfor posts net loss of $5.2 million

Canfor Corporation has reported its results for the third quarter of 2009. The ongoing downturn in the U.S. housing market continued to significantly impact Canfor’s financial performance in the period; however, further cost reductions, higher pulp sales revenues and a foreign exchange translation gain on US dollar debt limited the Company’s net loss for the third quarter of 2009 to $5.2 million ($0.04

per share).

These results compared to net income of $10.5 million ($0.07 per share) for the second quarter of 2009, and a net loss of $94.2 million ($0.66 per share) for the third quarter of 2008. For the nine months ended September 30, 2009, the Company’s net loss was $53.5 million ($0.38 per share), compared to a net loss of $115.4 million ($0.81 per share) for the comparable period in 2008.

Commenting on the results, Canfor’s President and CEO Jim Shepard said, “Our third quarter results reflect further progress in our cost reduction efforts and a welcome uplift in pulp prices, but there is no disguising the continued challenges presented by the troubled U.S. housing market.”

The Company operated at approximately 50% of lumber capacity for the quarter. In addition to indefinitely idling its Radium, Rustad and Vavenby sawmills in June and July, the Company curtailed another 95 million board feet of lumber production, in the form of summer vacation shuts, at its continuing Western SPF and SYP operations in the third quarter. In late July, the Company restarted its Mackenzie sawmill after a 13-month curtailment. “The restarting of our Mackenzie operation is a good news story in very trying times and has been made possible through the cooperation of our employees and other stakeholders,” said Shepard.

Lumber market conditions are expected to remain difficult through the balance of 2009 and into 2010, with the recent surge in the Canadian dollar creating additional challenges for Canadian producers. “We will continue to adjust our production levels to match demand,” said Shepard. He added that the Company’s top priorities in the short term would remain cash conservation and sustainable performance improvements. “Our overriding objective is the same - to emerge from this downturn stronger than ever so that we can take full advantage of the recovery when it comes,”

said Shepard.

Canfor has also announced that it will be taking curtailments at most of its sawmills over the Christmas period. This decision will reduce Canfor’s lumber production by approximately 37 million board feet of SPF lumber.

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Weak U.S. housing market continues to impact Canfor results - Improved pulp markets, cost reductions, US$ debt translation gain

limit Company’s net loss to $5.2 million (Canfor)