Ms. Corinne Stavness reports

CANFOR PULP PRODUCTS INC. ANNOUNCES SECOND QUARTER 2014 RESULTS AND QUARTERLY DIVIDEND

Canfor Pulp Products Inc. had net income of $18.8-million, or 27 cents per share, for the second quarter of 2014, compared with $25.7-million, or 36 cents per share, for the first quarter of 2014 and $7.6-million, or 11 cents per share, for the second quarter of 2013. For the six months ended June 30, 2014, the company's net income was $44.5-million, or 63 cents per share, compared with $18.5-million, or 26 cents per share, for the six months ended June 30, 2013.

The attached table summarizes selected financial information for the company for the comparative periods.

                             FINANCIAL HIGHLIGHTS
        (millions of Canadian dollars, except per-share amounts)    

                                      Q2       Q1      YTD       Q2      YTD
                                    2014     2014     2014     2013     2013

Sales                           $  252.5 $  226.4 $  478.9 $  227.6 $  445.1
Operating income                $   29.6 $   36.4 $   66.0 $   19.5 $   38.5
Net income                      $   18.8 $   25.7 $   44.5 $    7.6 $   18.5
Net income per share, basic and                                             
diluted                         $   0.27 $   0.36 $   0.63 $   0.11 $   0.26
Adjusted net income             $   18.4 $   26.7 $   45.1 $   15.4 $   27.8
Adjusted net income per share,                                              
basic and diluted               $   0.26 $   0.37 $   0.64 $   0.22 $   0.39

After adjusting for items affecting comparability with the prior periods, the company's adjusted net income for the second quarter of 2014 was $18.4-million, or 26 cents per share, compared with an adjusted net income of $26.7-million, or 37 cents per share, for the first quarter of 2014. Canfor Pulp's adjusted net income for the second quarter of 2013 was $15.4-million, or 22 cents per share.

The company reported operating income of $29.6-million for the second quarter of 2014, a decrease of $6.8-million from operating income of $36.4-million for the first quarter of 2014, as the impact of pulp and paper maintenance outages and higher fibre costs more than offset higher pulp and paper shipments. In addition, despite slight increases in the average northern bleached softwood kraft pulp prices to North America and Europe, pulp unit sales realizations experienced a small decrease compared with the previous quarter due to a combination of weaker prices to China, a slightly stronger Canadian dollar and a higher proportion of shipments to lower-margin markets, including Asia, mostly tied to constraints in the previous quarter due to the Vancouver port trucker strike.

Global softwood pulp markets were steady through the second quarter of 2014. Softwood pulp demand was solid across all regions, and global softwood pulp producer inventory levels tightened through the quarter, decreasing three days from the end of March, 2014, to 25 days supply in June, 2014, partly reflecting supply constraints due to seasonal maintenance downtime (market conditions are generally considered balanced when inventories are in the 27 to 30 days of supply range). The North American NBSK pulp list price was stable over the quarter averaging $1,030 (U.S.) per tonne, up $13 (U.S.) per tonne, or 1 per cent, compared with the first quarter of 2014. Discount levels were consistent with the previous quarter. The NBSK pulp list price to Europe also remained largely unchanged, averaging $925 (U.S.) per tonne, up $5 (U.S.) per tonne from the previous quarter, while the average NBSK pulp list price to China was down $27 (U.S.) per tonne, or 4 per cent, to $730 (U.S.) per tonne.

Pulp shipments were up 11 per cent from the previous quarter, largely attributable to improved transportation performance following the challenges experienced in the prior quarter. Pulp production levels were down 8 per cent from the previous quarter principally related to the maintenance outages at the Intercontinental and Prince George pulp mills, which reduced market pulp production by 18,000 tonnes. Pulp unit manufacturing costs were up moderately compared with the previous quarter, mostly due to the aforementioned maintenance outages and increased fibre costs, partially offset by seasonally lower energy costs. The higher unit fibre costs reflected higher delivered sawmill residual and whole log chip costs and seasonal factors.

The company's paper segment's operating income was down $700,000 from the previous quarter, with the impact of a maintenance outage of the Prince George kraft paper machine partially offset by higher shipment levels reflecting the improved transportation performance.

Commenting on the second quarter's results, Canfor Pulp's chief executive officer, Don Kayne, said: "Market conditions were better than anticipated, allowing us to generate solid financial performance this quarter. With our largest maintenance outages behind us, we will be focused on optimizing our production performance and sales mix through the balance of the year."

NBSK pulp markets are steady heading into the seasonally slower third quarter of 2014. For the month of July, 2014, the company announced NBSK pulp list prices of $1,030 (U.S.) per tonne in North America and $730 (U.S.) per tonne in China, both unchanged from June, 2014. A risk of price weakness remains for the second half of 2014 due in part to reduced global consumption during the historically slower summer months and new hardwood pulp capacity projected to flow into markets.

Early in July, the company's operations experienced some disruptions, which impacted production by approximately 10,000 tonnes. The mills have now returned to normal operating rates. A maintenance outage originally planned at the Northwood pulp mill in the third quarter of 2014 has been deferred to the fourth quarter of 2014 and is projected to reduce production by 10,000 tonnes.

On July 23, 2014, the board of directors declared a quarterly dividend of 6.25 cents per share with a declaration date of July 23, 2014, payable on Aug. 12, 2014, to the shareholders of record on Aug. 5, 2014.

Additional information and conference call

A conference call to discuss the second quarter financial and operating results will be held on July 25, 2014, at 8 a.m. Pacific Time. To participate in the call, please dial 416-340-9534 or toll-free 800-952-6845. For instant replay access until Aug. 8, 2014, please dial 800-408-3053 and enter participant passcode 9991781 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 financial statements and a presentation used during the conference call can be accessed on the company's website.

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