Canfor Pulp announces first quarter results

Canfor Pulp Products Inc. recently announced its first quarter 2011 results as well as the results of Canfor Pulp Limited Partnership (the Partnership) in which CPPI has a 49.8% ownership.

The Partnership reported sales of $252.3 million and net income of $50.7 million, or $0.71 per unit, for the quarter ended March 31, 2011. The Partnership generated EBITDA of $66.7 million in the quarter. Net income of the

Partnership improved by 7% when compared to the prior quarter as a result of lower unit manufacturing costs, offset by lower shipment volumes and the impact of a stronger Canadian dollar. There were no significant maintenance outages during the quarter.

CPPI reported net income of $40.6 million, representing CPPI’s share of the Partnership’s income less a current tax provision of $4.9 million. Also included in CPPI net income is a deferred tax recovery of $21.3 million resulting from a change in the statutory income tax rate on conversion of Canfor Pulp Income Fund to a taxable Canadian corporation effective January 1, 2011.

In the quarter, the Partnership generated distributable cash of $54.6 million, or $0.77 per unit. Based on strong first quarter results of the Partnership and a positive pulp market outlook for the balance of the year, CPPI announced its first quarterly dividend of $0.40 per share to be paid on May 19, 2011 to shareholders of record at the close of business on May 12, 2011.

Global softwood demand remained very strong in the first quarter of 2011 with record shipments in March 2011 led by demand in China. Global softwood producer inventories remained tight at 24 days of supply as the strong global shipments offset seasonally strong supply. As a result of continued tight market conditions, producers were successful at implementing NBSK pulp list price increases of US$30 per tonne for North America and Europe during the first quarter of 2011 to US$990 and US$980 respectively. The Partnership’s NBSK pulp list price for China increased from US$840 in December 2010 to US$900 in March 2011, driven by strong demand from that region.

The global softwood pulp market is expected to remain tight through the second quarter of 2011. Supply is expected to be curtailed due to annual maintenance downtime coupled with extended outages in Canada to implement several large capital projects funded under the Canadian Federal Government Green Transformation Program. For the Partnership, scheduled maintenance outages at the Prince George and Intercontinental Pulp Mills were successfully completed early in the second quarter of 2011 with approximately 12,000 tonnes of reduced production.