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CIBC
INVESTOR PRESENTATION
June 18 and 19, 2014
London and Frankfurt
2
This presentation and comments associated with it contain
forward-looking statements including statements relating to U.S.
housing recovery, the potential for constrained lumber supply,
energy-related opportunities, earnings sensitivity and estimated
annual capital expenditures. These statements are subject to the
cautionary statement which introduces West Fraser’s 2013 Annual
Management’s Discussion & Analysis which can be accessed on
the Company website www.westfraser.com.
Forward-Looking Statements
3
• To be a leading forest products manufacturer,
focused on solid wood products
• Strong financial results through the business cycle
• Long-term growth and shareholder value
enhancement
• Stable, conservative financial structure
Our Goals
4
• Operational excellence
• Diversification
• Product differentiation
• Integration
Our Strategy
5
• Managing to ensure a committed workforce
• Cost control and efficiency
• Continuous reinvestment
• Internal and external benchmarking and
competition
• Straightforward, consistent business model
Operational Excellence
6
Diversification
PRODUCTS
- Lumber
- Panels
- Market pulp
- Newsprint
GEOGRAPHY
- Western Canada
- U.S. South
MARKETS
- North America
- Asia
7
LUMBER 29 mills
PANELS 6 mills
PULP & PAPER 5 mills
SPF 3.9 Bfbm SYP 2.3 Bfbm Total 6.2 Bfbm
Plywood: 830 MMsf3/8” MDF: 300 MMsf3/4” LVL: 3.2 MMcf
NBSK: 590 Mtonnes BCTMP: 650 Mtonnes Newsprint: 135 Mtonnes
Product Diversification
• North America’s largest lumber producer
• Largest plywood producer in Canada
• Third largest pulp producer in Canada
8
Lumber66%
Panels11%
Pulp & Paper23%
Trend Sales Mix ($)
9
Geographic Diversification
10
West Fraser Lumber Capacity
Geographic diversification in lumber
B.C. 40%
Alberta 23%
U.S. 37%
11
• Wood as the best environmental choice
• Renewable resource, sustainable business
• Expanding applications
• Bioenergy, full use of the resource
Product Differentiation
12
• Lumber, panels, pulp, newsprint and energy
• Substantial fibre self-sufficiency
• Fuller utilization of resource
• Some benefits from counter-cyclicality
• Better able to respond to new opportunities
such as bioenergy
Integration (in Canada)
13
Demand - North American housing
- Chinese construction and
industrial applications
- Japanese housing
Supply - Fibre limitations
- Residual offtake
- Mill closures
- People
Efficiency - Capital investment
- Business model
Earnings Growth Drivers - Lumber
14
Returns on Lumber
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Q1-1
4
EBITDA margin (%) - Lumber
Average: 16%
15
U.S. Housing
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Production Underlying Demand
Millio
n U
nit
s
Source: FEA, Q1 2014
Significant pent up demand bodes well for long-term recovery
Pent Up Housing Demand (conventional + mobile)
16
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
MortgageBankers
WellsFargo
NAHB FEA APA RISI MesirowFinancial
RoyalBank
Average
'00
0s
U.S. Housing Forecast (2014 & 2015)Single & Multi Family
Source: APA, April 2014
U.S. Housing
17
Canadian Shipments to China
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2006 2007 2008 2009 2010 2011 2012 2013
MM
fbm
Source: Council of Forest Industries, December 2013
Equivalent to 300,000 housing starts *
* Based on consumption of 11.5 Mfbm per U.S. housing start (average mix of single and multi family)
18
10
20
30
40
50
60
70
80
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Annual Allowable Cut
BC Interior Quebec Ontario
Canadian Fibre Supply M
illio
n (
M3
)
Forecast
Source: FEA, Q4 2013
19
0
5
10
15
20
25
2000 2002 2004 2006 2008 2010 2012 2014 2016
28.5 Bfbm of deferred sawtimber volume
U.S. South Positive Timber Inventory
Drain Projected Excess Growth
Bfbm, Int’l
Source: FEA, Q4 2013
20
Demand - China’s paper, tissue and packaging
demand
- Developing countries’ demand
- Price of cotton and similar products
Supply - European paper capacity closures
- Russian and Canadian start ups
- Product diversification
(e.g. dissolving pulp)
- South American production
Reliability - Capital
- Technology
Earnings Growth Drivers - Pulp
21
Pulp & Paper Sales Mix – 2013 ($)
North America,
38%
Asia, 56%
Europe, 6%
22
Pulp - NBSK End-Use Products
Tissue/ Towel55%
Board14%
Uncoated Paper10%
Coated Paper11%
Specialty10%
West Fraser 2013 shipments:
510,100 Metric Tonnes
23
Pulp - BCTMP End-Use Products
Tissue/Towel1%
Specialty8%
Uncoated Paper
23%
Coated Paper21%
Board47%
West Fraser 2013 shipments:
599,759 Metric Tonnes
24
Alberta Newsprint is the lowest cost newsprint producer in North America
and a positive contributor to the profitability of our pulp and paper business
Paper — Newsprint C
dn
$/t
on
ne
North American Newsprint Cost Structure Par Exchange Rate
ANC
Source: PPPC Cost Survey 2011
25
• Woodwaste to produce heat and steam to dry
wood products and for electricity and steam for
pulp mills
• Woodwaste to produce electricity to be used or
sold
• Pulp mill effluent as a source for biogas-electricity
generation
• Expanding opportunities to generate and sell
electricity levering off current business
Energy Opportunities
26
Power Generation from Biomass
Cariboo pulp mill turbo-generator (completed) • Mill achieved energy self-sufficiency and excess power sold to
B.C. Hydro
Slave Lake pulp mill biomethanation project • Estimated startup late 2014
B.C. Hydro (Phase II) power generation projects (at two sawmills)
• Estimated startups: Q3 and Q4 - 2014
• Long-term contracts to sell power to B.C. Hydro
• Projected to reduce costs and contribute to sawmill earnings
when completed
Energy Opportunities
27
• Reinvest profits to lower costs, improve efficiency
through technology and improved processes
• Estimate normalized annual capital spending
between $150 and $225 million
• Anticipate several years of “catch up” capital
spending including 2014 estimated to exceed $300
million
Capital Strategy
28
Earnings Sensitivity to Key Variables (2013)
Estimated Earnings Sensitivity to Key Variables 1
(based on 2013 production - $ millions)
Factor Variation Change in pre - tax e arnings
Lumber price US$ 1 0 ( per Mfbm ) 55
Plywood price Cdn $ 1 0 ( per Msf ) 8
NBSK price US$ 1 0 ( per tonne ) 5
BCTMP price US$ 1 0 ( pe r tonne ) 6
U.S. – Canadian $ exchange rate 2 US$0.01 ( per Cdn $ ) 21
1. Each sensitivity has been calculated on the basis that all other variables remain constant and assumes year end foreign exchange rates.
2. Excludes exchange impact of translation of U. S. dollar - denominated debt and other monetary items. Reflects the amount of the initial
US$0.01 change; additional changes are substantially, but not exactly, linear.
29
Strong Cash Generation ($millions)
Total Q1-2014 2013 2012 2011 2010
Cash from Operations 1,081 (39) 419 195 85 421
Capital Expenditures 912 93 358 159 213 89
Acquisitions 90 60 - 30 - -
Dividends 86 6 24 24 24 8
30
• Proven ability to generate strong cash flow even in
worst markets
• Consistent, straightforward business plan
• Loyal, long-term employee and management base
• Conservative financial management coupled with
proven ability to grow strategically
Why Invest in West Fraser?
31
Annualized Shareholder Return (Cdn$)
14.2%
2.9%
4.8%
11.4%
9.7%
5.1%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
West Fraser S&P/TSX Dow Competitor A Competitor B Competitor C
June 2006* – June 12, 2014
* June 2006 marked the beginning of the steep decline in U.S. housing starts
Source: TD Bank
32
“WFT” – Toronto Stock Exchange
www.WestFraser.com
These materials have been prepared by Management of the
Company. No regulatory authority has approved or disapproved of
the contents of these materials. These materials do not constitute an
offer to sell or the solicitation of an offer to buy any securities of the
Company, and shall not constitute an offer, solicitation or sale of the
Company’s securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful. Securities of the Company may
not be offered or sold in the United States absent their prior
registration or qualification or an applicable exemption from the
applicable registration or qualification requirements.
33
APPENDIX
34
West Fraser Lumber Production
77%
12%
11%
2004 2.8 Bfbm
48%
21%
31%
2013 5.2 Bfbm
B.C. Interior Alberta U.S. South
35
Lumber Operating Rate - 2013
90%
79%
87%
80% 78%
74%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
% o
f C
ap
ac
ity
WFT
Canada B.C.
Interior Canada
U.S.
South WFT
U.S. U.S.
Low-cost structure allows for higher operating rates in down market
36
Acquisition of Buchanan Lumber,
High Prairie, Alberta • Acquisition includes:
– High Prairie sawmill (current capacity of 110 MMfbm)
– Related real estate and transportation business
– Timber harvesting rights with AAC of 430,000 m3 of coniferous and 21,000 m3 of deciduous timber
• Purchase price of $55.4 million plus working capital paid in cash at closing (April 3, 2014)
• 180 employees
West Fraser intends to expand capacity to approximately 175 MMfbm through an estimated capital investment of $15 million.
37
Acquisition of Travis Lumber,
Mansfield, Arkansas • Western Arkansas sawmill
with a workforce of 140
• Purchase price of US$46 million
(C$51 million) plus
working capital paid in
cash at closing
(March 7, 2014)
• Current capacity of 110 MMfbm
West Fraser is planning expansion to approximately 150
MMfbm through an estimated US$10 million (C$11 million
capital) investment.
38
Acquisition of Bibler Bros.,
Russellville, Arkansas
• Well-capitalized mill with
190 employees and
annual capacity of
approximately 160 MMfbm
• Purchase price of US$61 million
(C$67 million) plus working capital
payable in cash at closing (anticipated April 25, 2014)
• Will be West Fraser's fourth sawmill located in Arkansas
39
BRITISH
COLUMBIA
SMITHERS
HOUSTON
QUESNEL
WILLIAMS LAKE
CHETWYND
FRASER LAKE
SLAVE LAKE
BLUE RIDGE
CHASM
100 MILE SUNDRE
HINTON EDSON
HIGH PRAIRIE
ALBERTA
2014
2012
Recent Growth
40
ARKANSAS
LITTLE
ROCK
MANSFIELD
RUSSELLVILLE
HUTTIG
LEOLA
NEW BOSTON
(TEXAS)
2014
Recent Growth