Canfor Corporation: Global Economic Climate Significantly Impacts Fourth Quarter Results

Market Wire, February, 2009

Other significant items affecting comparability with prior periods included the following:

- Asset impairment charges of $99.6 million ($74.1 million, after tax), of which the significant majority related to the indefinitely idled Tackama and PolarBoard plants. The remainder of the impairment related to the Company's non-bank asset-backed commercial paper ("ABCP"), and certain other long-term investments.

- Losses recorded on derivative financial instruments of $81.7 million ($50.3 million, after tax), reflecting a significant drop in value of the Canadian dollar against the US dollar for the fourth quarter, as well as a decline in energy prices. See additional commentary in "Non-Segmented Items" section.

- A net foreign exchange loss of $72.0 million ($52.2 million, after tax) relating to the Company's US-dollar denominated long-term debt and investments, as a result of the sharp decline in the Canadian dollar.

OPERATING RESULTS BY BUSINESS SEGMENT

Lumber

Selected Financial Information and Statistics - Lumber

(millions of dollars          Q4        Q3       Year        Q4       Year
 unless otherwise noted)    2008      2008       2008      2007       2007
--------------------------------------------------------------------------
Sales                    $ 363.9   $ 378.8  $ 1,490.5   $ 395.3  $ 1,942.7
EBITDA(6)                $ (24.1)  $  15.3  $   (55.5)  $ (73.9) $  (198.4)
Adjusted EBITDA          $ (20.4)  $  18.4  $   (36.9)  $ (66.9) $  (176.8)
EBITDA margin(6)             (7)%       4%        (4)%     (19)%      (10)%
Adjusted EBITDA margin       (6)%       5%        (2)%     (17)%       (9)%
Operating loss(6)        $ (50.8)  $  (8.2) $  (155.0)  $ (99.5) $  (301.2)
--------------------------------------------------------------------------
Average SPF 2x4 #2&Btr
 lumber price in US$(7)  $   190   $   263  $     222   $   230  $     250
Average SPF price
 in Cdn$                 $   230   $   274  $     237   $   226  $     269
Average SYP 2x4 #2
 lumber price in US$(8)  $   258   $   289  $     281   $   277  $     280
Average SYP price
 in Cdn$                 $   313   $   301  $     300   $   272  $     301
--------------------------------------------------------------------------
Production - SPF
 lumber (MMfbm)            791.6     747.1    3,299.4     866.8    4,111.6
Production - SYP
 lumber (MMfbm)             78.6      99.6      388.6      93.3      389.2
Shipments - SPF
 lumber (MMfbm)(9)         834.3     755.9    3,388.2     988.4    4,233.5
Shipments - SYP
 lumber (MMfbm)(9)          86.2     110.3      432.7     103.3      448.7
Shipments - wholesale
 lumber (MMfbm)             35.7      39.8      171.0      57.2      325.2
--------------------------------------------------------------------------
6 EBITDA and Operating loss for the fourth quarter of 2008 include a log
  inventory write-down expense of $1.5 million (Q3 - $0.9 million
  recovery), which resulted primarily from lower prices.
7 Western Spruce/Pine/Fir, per thousand board feet (Source - Random
  Lengths Publications, Inc.)
8 Southern Yellow Pine, Eastside, per thousand board feet (Source - Random
  Lengths Publications, Inc.)
9 Canfor-produced lumber, includes shipments of lumber purchased for
  remanufacture.