Canfor Corporation Announces First Quarter, 2008 Results

Market Wire, May, 2008

Canfor Corporation (TSX: CFP) today reported a net loss of $85.4 million ($0.60 per share) for the first quarter of 2008, compared to a net loss of $237.0 million ($1.66 per share) for the fourth quarter of 2007 and a net loss of $42.7 million ($0.30 per share) for the first quarter of 2007.

The loss for the first quarter of 2008 included several significant items that affect comparability with prior periods, including a $42.0 million log inventory devaluation, resulting from a new inventory accounting standard, which impacted net earnings by $29.0 million ($0.20 per share), an after-tax foreign exchange translation loss on long-term debt net of investments of $10.1 million ($0.07 per share), and an income tax recovery of $9.1 million ($0.06 per share) resulting from a reduction in British Columbia corporate income tax rates. Earnings for the fourth quarter of 2007 were significantly impacted by an after-tax asset impairment charge of $189.1 million ($1.33 per share).

After adjusting for significant items that affect comparability with prior periods, the Company's adjusted net loss for the first quarter of 2008 was $60.5 million ($0.42 per share). Comparable adjusted net losses for the fourth and first quarters of 2007 were $69.6 million ($0.49 per share) and $40.7 million ($0.28 per share), respectively.

Results for the first quarter of 2008 reflected the continuation of depressed lumber and panel prices resulting from the ongoing U.S. housing market downturn, the strong Canadian dollar and a 15% export tax on lumber shipments to the U.S. Average SPF lumber prices, measured by 2X4 No.2 & Better, declined a further US$25 per thousand board feet (Mfbm) to US$205 per Mfbm in the quarter, at one point dropping to US$190 per Mfbm. Reflecting the extremely challenging environment, the Company operated at well below capacity at both its lumber and panel operations in the first quarter. Partly offsetting the negative results from the solid wood business was a strong financial performance from the pulp and paper segment, which for the most part reflected improved pulp and paper prices.

Despite the extremely difficult market conditions, the Company continued to make further headway in its efforts to reduce costs during the quarter, reporting both lower log and cash conversion costs compared to the previous quarter. "The progress we are making on cost reduction is encouraging. We continue to be very focused on tightly managing our costs and cash flows as we weather this severe downturn," said Canfor President and CEO, Jim Shepard.

With little prospect of any meaningful price recovery on the immediate horizon, in early April the Company announced further significant lumber curtailments, equivalent to 600 million board feet on an annualized basis. "This decision is consistent with our determination to ensure that our production matches the changing demand level of our markets," said Shepard.

Conference Call

A conference call to discuss the first quarter 2008 financial and operating results will be held on Monday, May 5, 2008 at 7:00 am Pacific time. To participate in the call, please dial 416-641-6126 or Toll-Free 1-866-542-4236. For instant replay access until June 1, 2008, please dial 416-695-5800 or Toll-Free 1-800-408-3053 and enter participant pass code 3238962. The conference call will be webcast live and will be available at www.canfor.com .

Forward Looking Statements

Certain statements in this press release constitute "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. Words such as "expects", "anticipates", "intends", "plans", "will", "believes", "seeks", "estimates", "should", "may", "could", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs, and actual events or results may differ materially. There are many factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements. Forward-looking statements are based on current expectations, and the Company assumes no obligation to update such information to reflect later events or developments, except as required by law.

Canfor is a leading integrated forest products company based in Vancouver, British Columbia (BC) with interests in facilities in BC, Alberta, Quebec, Washington State, and North and South Carolina. The company is the largest producer of softwood lumber in Canada while also producing oriented strand board (OSB), plywood, remanufactured lumber products and specialized wood products. Canfor also owns a 50.2% interest in Canfor Pulp Limited Partnership, which is one of the largest producers of northern softwood kraft pulp in Canada and a leading producer of high performance kraft paper. Canfor shares are traded on the Toronto Stock Exchange under the symbol CFP.