Business News
Canfor Pulp Income Fund Announces Fourth Quarter 2007 Results
Thursday 21. February 2008 - Canfor Pulp Income Fund (the "Fund") (TSX:CFX.UN) announced today its fourth quarter 2007 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 $215.1 million and net income of $12.1 million, or $0.17 per unit, for the quarter ended December 31, 2007. The impact of a stronger Canadian dollar during the quarter and increased manufacturing costs reduced the results when compared to the prior quarter sales of $228.9 million and net income of $33.2 million, or $0.46 per unit. Although fibre costs were maintained at the prior quarter levels, manufacturing costs increased when compared to the third quarter due to the seasonal impact on energy costs and higher spending on maintenance costs. The fourth quarter 2007 results are lower than those in the same period a year ago, when sales were $225.2 million with net income of $44.8 million or $0.63 per unit, primarily due to the impact of the stronger Canadian dollar and fibre costs, which more than offset increases in NBSK pulp list prices.
The Partnership generated adjusted distributable cash (defined as standardized distributable cash before changes in working capital and after provision for accrued capital expenditures) of $13.6 million, or $0.19 per unit, in the fourth quarter and $139.4 million, or $1.96 per unit, for the year ended December 31, 2007. Capital expenditures incurred were $14.7 million in the quarter and $31.9 million for the year. Fluctuations in working capital are financed through the Partnership’s accumulated cash and bank credit lines.
Based on the Partnership’s results, the Fund earned net income of $8.7 million, or $0.25 per Fund unit, in the fourth quarter of 2007, compared to net income of $12.2 million, or $0.56 per Fund unit, in the same quarter of 2006.
In the fourth quarter, the Partnership produced 261,400 tonnes bringing the year’s total to 1,175,900 tonnes, an annual production record, bettering the previous year’s record by more than 31,000 tonnes. This quarter production level was 4,300 tonnes below the third quarter due in part to additional scheduled maintenance down time – 1,700 tonnes, – and also as a result of the onset of winter operating conditions.
Commenting on the results, Paul Richards, President and CEO of the Partnership said: “It was another solid operating quarter and a record breaking year, with the establishing of new annual production and safety performance records, strong focus on controllable costs and the highest level of net sales since 1995. These factors enabled us to mitigate the impact of the rapid rise in the Canadian dollar and the increased pressure through the year on fibre supply and fibre price related to sawmill curtailments precipitated by the slowdown in the U.S. housing market.”
Pulp prices in U.S. dollars have continued to increase during the quarter but not sufficiently to fully offset the impact of the stronger Canadian dollar against U.S. currency. List prices at the end of the quarter were US$870 per tonne for delivery to the United States and Northern Europe. The NBSK pulp market is currently balanced, with curtailments and closures in the printing and writing paper sector in both North America and Europe, combined with price sensitivity in Asia being balanced by the threat of further curtailments and closures of pulp production due to fibre shortages and the impact of the strong Canadian dollar.
The Partnership announced the appointment of Terry D. Hodgins, CA as Chief Financial Officer and Secretary. Mr. Hodgins was appointed Interim Chief Financial Officer and Secretary on October 24, 2007.
The Fund also announced its cash distribution for the month of February of $0.12 per Fund unit, to be paid on March 14, 2008 to unitholders of record at the close of business on February 29, 2008.