Canfor Pulp Products Inc. (CFX-T C$8.50) Benoit Laprade, CA, CFA - 514-287-3627
(Scotia Capital Inc. - Canada)
Q2/12 Impacted by Unplanned Outage; Dividend Cut to $0.05
Event
■ Canfor Pulp reported EBITDA of $25.1M, compared with our estimate of $31.6M and
consensus of $25.7M.

Implications
■ While overall revenues were marginally higher than expected ($2.3M) on higher paper
shipments and better average net realized prices for pulp and paper, COGS was $7.6M
higher on the back of planned and unplanned maintenance while other costs were $1.2M
higher. Some of the COGS variance may be recovered under business interruption
insurance and could be only a timing difference.

■ Management announced a quarterly dividend of $0.05 to be paid on August 14, down from
$0.22/share in Q1/12. We now forecast an annual dividend payout of ~$0.64/share (down
from $1.20) in 2012.

■ Pulp prices are set to decline US$30/tonne in N.A. for August to US$850/tonne. We expect
prices to average US$881/tonne in 2012 and US$895/tonne in 2013, compared with
US$977/tonne in 2011.

Recommendation
■ We maintain our 2-SP rating. Our one-year target has been lowered to $11.25, reflecting our
revised pulp price and dividend forecasts.