Canfor Pulp Posts Second Quarter 2009 Results
July 27, 2009 - Canfor Pulp Income Fund (the "Fund") on Friday announced its second quarter 2009 results as well as the results of Canfor Pulp Limited Partnership (the Partnership) in which the Fund has a 49.8% ownership.
The Partnership reported sales of $205.0 million and net income of $1.5 million, or $0.02 per unit, for the quarter ended June 30, 2009. The Partnership generated EBITDA of $7.2 million in the quarter. The Fund reported net income of $4.4 million, representing the Fund's share of the Partnership's net income and a non-cash recovery of $3.7 million for future income tax.
The Partnership generated standardized distributable cash of $20.6 million, or $0.29 per unit. Adjusted distributable cash was $1.1 million, or $0.02 per unit, in the second quarter of 2009. For the second quarter, the Partnership and the Fund declared distributions of $0.03 per unit.
The second quarter of 2009 was highlighted by a continued focus on cost control, working capital management and cash conservation in light of continued adverse market conditions. NBSK pulp US dollar list prices decreased further in the quarter and when combined with the stronger Canadian dollar represented a 10% decrease of list price in Canadian dollar terms.
Offsetting the lower overall pricing for the Partnership's pulp and paper products was a 10% decrease in unit manufacturing costs attributable to lower fibre, energy and chemical prices combined with focus on controllable costs through cost reduction initiatives and the management of discretionary spending. Working capital was reduced by $22.2 million in the quarter as finished goods inventories were reduced on increased sales into China. The reduction in working capital, and capital expenditures limited to $2.2 million, allowed the Partnership to increase its net cash position to $3.2 million as compared to a deficit of $15.6 million at the end of the first quarter of 2009.
Pulp markets improved in the second quarter as significant supply curtailments have mitigated reductions in global demand, resulting in reduced producer inventory stocks and price increases. NBSK US dollar list prices were US$635 in April rising to US$660 in June with announced prices for July of US$700.
During the second quarter of 2009 the Intercontinental and Prince George Pulp and Paper Mills completed scheduled maintenance outages resulting in reduced market pulp production of approximately 7,000 tonnes and reduced paper production of 3,000 tonnes. There are no planned maintenance outages for the third quarter of 2009. For the remainder of the year there is a planned maintenance outage in the fourth quarter at our Northwood facility which is expected to reduce production levels by 21,000 tonnes.
The billion dollar Green Transformation Program announced by the Canadian government on June 17, 2009 proposes to provide a $0.16 per litre credit to qualifying Canadian facilities for black liquor consumption commencing January 1, 2009. The program is to take the form of funding for qualifying energy and environmental capital projects. The Partnership expects to qualify for funding under this program and has commenced development of a list of significant qualifying capital projects in anticipation of submission once the program details are finalized.
On July 22, 2009 the Fund announced a cash distribution of $0.01 per Fund unit for the month of July to be paid on August 14, 2009.
SOURCE: Canfor Pulp Income Fund