Ms. Christine Kennedy reports

CANFOR REPORTS RESULTS FOR FIRST QUARTER OF 2012

Canfor Corp. has released financial results, including a net loss attributable to shareholders of $16.2-million, or 11 cents per share, for the first quarter of 2012, compared with a shareholder net loss of $44.1-million, or 31 cents per share, for the fourth quarter of 2011, and shareholder net income of $7.0-million, or five cents per share, for the first quarter of 2011.

The shareholder net loss for the first quarter of 2012 included various items affecting comparability with prior periods, which had an overall net positive impact of $6.1-million, or five cents per share. After adjusting for such items, the company's adjusted shareholder net loss for the first quarter of 2012 was $22.3-million, or 16 cents per share, compared with an adjusted shareholder net loss of $32.1-million, or 22 cents per share, for the fourth quarter of 2011, and effectively break-even on an adjusted basis for the first quarter of 2011.

The company reported an operating loss of $21.5-million for the first quarter of 2012, compared with an operating loss of $63.1-million in the fourth quarter of 2011. Excluding inventory valuation adjustments and one-time restructuring costs, as well as impairment costs in the previous quarter, Canfor's operating loss was $26.2-million in the current quarter compared with $20.5-million in the prior quarter. The adverse variance of $5.7-million primarily reflected weaker results in the pulp and paper segment.

Lumber markets were mixed in the first quarter of 2012, as a modest improvement in North American market conditions contrasted with a weaker market for lower-grade products in China, where the effects of a significant inventory buildahead of the lunar new year and slower demand weighed heavily on prices through much of the quarter. U.S. housing activity saw a small increase, in part due to unseasonably mild weather, with housing starts for the quarter averaging 687,000 units (seasonally adjusted annual rate), up 3 per cent from the previous quarter. Canadian housing starts also saw a modest increase from the previous quarter.

Despite an increase in North American prices, overall lumber sales realizations were largely unchanged from the previous quarter due to lower offshore realizations, particularly for low-grade products. The average North American benchmark Western SPF two-by-four No. 2 Btr price increased $28 (U.S.), or 12 per cent, to $266 (U.S.) per thousand board feet, although increases for most other widths and dimensions were less marked. Prices for most SYP products saw solid increases. For northern bleached softwood kraft pulp, weak global demand saw prices fall from the previous quarter, with U.S. prices down $50 (U.S.) per tonne. Compounding challenges for Canadian producers, sales realizations were negatively impacted by a stronger average Canadian dollar, which was up over two cents, or 2 per cent, from the previous quarter.

Lumber shipments were in line with the previous quarter at just under one billion board feet, while production was up 17 per cent, reflecting continued improvements in productivity in the current quarter, as well as downtime taken over the Christmas period in the previous quarter. Lumber unit manufacturing costs saw a decrease compared with the previous quarter, reflecting reductions in unit cash conversion costs, largely resulting from the increased production levels, and a reduction in unit log costs. However, results in the lumber segment were negatively impacted by lower prices for residual fibre products, reflecting lower prices for sawmill residual chips (related to lower NBSK pulp sales realizations).

Pulp shipment and production levels were well up from the previous quarter, mostly reflecting downtime taken in the prior quarter at Canfor Pulp's Northwood pulp mill for capital upgrades. Improved pulp unit manufacturing costs in the current quarter reflected the higher production levels, as well as lower residual chip costs.

The company completed further capital projects in the quarter as part of its $300-million, three-year capital investment program at its lumber operations, including a planer upgrade at its Grande Prairie sawmill. This project was completed on time and on budget and is exceeding pro forma targets.

Looking ahead, the North American lumber market is projected to continue its modest recovery, while low-grade prices to China are projected to see a marked improvement in the second quarter. The global softwood pulp market is anticipated to improve modestly through the second quarter.

Commenting on the quarter, Canfor's president and chief executive officer, Don Kayne, said: "While it was encouraging to see improved lumber prices in North America in the first quarter, the effect of weak low-grade prices in China offset some of these gains. With inventories in China returning to more normal levels, we are anticipating an improvement in low-grade lumber prices to China in the second quarter." Mr. Kayne added that progress continued to be made with respect to improving the company's cost performance, "We continue to see a trend of steadily improving productivity and unit conversion costs at our lumber operations, which reflects both our targeted strategic capital investments and a strong focus on continuous improvement."

The company completed the acquisition of Tembec Industries Ltd.'s Southern B.C. Interior wood products assets late in the first quarter. Commenting on the purchase, Mr. Kayne said, "This is a key acquisition that supports our long-term strategy, particularly with respect to increasing our long-term supply of high-quality green fibre."

Additional information and conference call

A conference call to discuss the first quarter financial and operating results will be held on April 27, 2012, at 8 a.m. Pacific Time. To participate in the call, please dial 416-340-8527 or toll-free 877-440-9795. For instant replay access until May 31, 2013, please dial 905-694-9451 or 800-408-3053 and enter participant passcode 7168261 followed by the number sign. The conference call will be webcast live and will be available at the company's website. This news release, the attached financial statements and a presentation used during the conference call can be accessed on the company's website.

             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                     (millions of Canadian dollars)

                                                Three months ended March 31,
                                                              2012      2011

Sales                                                      $ 607.6   $ 624.0
Costs and expenses
Manufacturing and product costs                              429.6     408.5
Freight and other distribution costs                         122.4     112.6
Export taxes                                                  11.2      10.8
Amortization                                                  45.1      41.5
Selling and administration costs                              16.0      15.5
Restructuring, mill closure and severance costs                4.8       2.8
Total                                                        629.1     591.7
Operating income (loss)                                      (21.5)     32.3
Finance expense, net                                          (6.2)     (7.2)
Foreign exchange gain (loss) on long-term debt and
investments, net                                               4.0       4.7
Other income (expense), net                                   (0.2)     (1.7)
Net income (loss) before income taxes                        (16.5)     32.8
Income tax recovery (expense)                                  5.6      (0.5)
Net income (loss)                                          $ (10.9)  $  32.3
Net income (loss) attributable to
Equity shareholders of the company                         $ (16.2)  $   7.0
Non-controlling interests                                      5.3      25.3
Net income (loss)                                          $ (10.9)  $  32.3
Net income (loss) per common share (in dollars)
Attributable to equity shareholders of the company
Basic and diluted                                          $ (0.11)  $  0.05

We seek Safe Harbor.