Canfor Pulp Income Fund announced its third quarter 2010 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 record sales of $247.9 million and net income of $54.5 million, or $0.76 per unit, for the quarter ended September 30, 2010. The Partnership generated EBITDA of $63.6 million in the quarter, similar to the record level in the second quarter of 2010. The Fund reported net income of $27.9 million, representing the Fund’s share of the Partnership’s net income and a future income tax recovery of $0.8 million.In the quarter, the Partnership generated adjusted distributable cash of $55.3 million, or $0.78 per unit, and the Partnership and the Fund declared distributions of $0.69 per unit.
Partnership results were similar to the second quarter of 2010 as higher prices for the Partnership’s pulp and paper products offset lower shipments and higher unit manufacturing costs.
The scheduled maintenance outage at the Northwood Pulp Mill, originally estimated to result in 10,000 tonnes of reduced production was extended for additional inspections and repairs to the recovery boilers. The additional work
extended the outage into the fourth quarter of 2010 for a total of 24,000 tonnes of reduced production with approximately 18,000 tonnes in the third quarter and 6,000 tonnes in the fourth quarter. Softwood pulp markets remained balanced through the quarter. Bleached softwood inventories have increased as a result of reduced demand from China and the typical seasonal slowdown through the summer months. Rising inventories resulted in a US$30 price decrease in North American markets from the US$1,020 peak in July 2010 to US$990 per tonne for September 2010.
Some North American bleached softwood capacity was restarted in late September which will result in a modest increase in supply. Conversely, seasonal maintenance downtime through October should mitigate this increase in
supply in the near term. The North American NBSK pulp list price for October 2010 is announced at US$970 per tonne, a US$20 per tonne reduction from September 2010. On October 20, 2010 the Fund announced a monthly distribution of $0.25 per Fund unit for the month of October, to be paid on November 15, 2010, to unitholders of record at the close of business on October 29, 2010.
