Business News
Canfor Pulp Income Fund Announces First Quarter 2009 Results
Tuesday 28. April 2009 - Canfor Pulp Income Fund (the "Fund") (TSX:CFX.UN) announced today its first 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 $186.3 million and a net loss of $21.6 million, or $0.30 per unit, for the quarter ended March 31, 2009. Non-operating items impacting the Partnership’s net loss totalled $11.8 million or $0.16 per unit and include a $3.9 million foreign exchange loss on translation of US dollar denominated long-term debt and a $5.7 million charge to net income representing settlement and revaluation to market of outstanding natural gas and US dollar working capital foreign exchange hedging contracts. The Partnership generated EBITDA of $2.2 million in the quarter. The Fund reported a net loss of $10.7 million, or $0.30 per Fund unit in the quarter, representing the Fund’s share of the Partnership’s loss.
The Partnership generated positive standardized distributable cash of $15.8 million, or $0.22 per unit. Adjusted distributable cash (defined as standardized distributable cash before changes in working capital and long-term deferred maintenance, and after provision for accrued capital expenditures) was negative $4.3 million, or $0.06 per unit, in the first quarter of 2009. Capital expenditures were $2.4 million in the quarter. For the first quarter, the Partnership and the Fund declared distributions of $0.06 per unit.
Financial results of the Partnership in the quarter were significantly impacted by the poor global economic environment resulting in a reduction in global demand for pulp and paper products, increased global inventory levels and further reductions in NBSK pulp list prices. As a result of these adverse conditions the Partnership, as previously reported, had commenced a market curtailment in December 2008 that continued into the first quarter of 2009. The market curtailment allowed the Partnership to manage inventory levels and mitigate the impact of the significant decline in global demand heading into the 2009 year. The market curtailment at all of the manufacturing operations reduced market pulp production by approximately 14,000 tonnes and paper production by approximately 4,700 tonnes in the first quarter of 2009. Continued reductions in demand, particularly in the US printing and writing paper grades, resulted in a 15% decrease in the US dollar list price of NBSK pulp in the first quarter of 2009.
To manage inventories during the adverse market conditions, the Partnership actively targeted opportunities in the tissue segment and non-contract spot sales. The Northwood Pulp Mill completed a maintenance outage in the first quarter of 2009, which resulted in approximately 7,000 tonnes of reduced production. Overall NBSK inventories were reduced in the quarter as a result of these measures, in spite of the difficult market conditions.
The Intercontinental and Prince George Pulp and Paper Mills are planning scheduled maintenance outages in the second quarter of 2009 and estimate reduced market pulp production of 7,000 tonnes and reduced paper production of 3,000 tonnes. There are no planned maintenance outages in the third quarter. 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.
On April 21, 2009 the Fund announced a cash distribution of $0.01 per Fund unit for the month of April to be paid on May 15, 2009.