Canfor Pulp Income Fund reports net income of $8.5 million

Canfor Pulp Income Fund (the Fund) announced today its third 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 $202.0 million and net income of $18.3 million, or $0.26 per unit, for the quarter ended September 30, 2009. The Partnership generated EBITDA of $25.1 million in the quarter. The Fund reported net income of $8.5 million, representing the Fund's share of the Partnership's net income and a non-cash charge of $0.6 million for future income tax.

The Partnership generated standardized distributable cash of $42.9 million, or $0.60 per unit. Adjusted distributable cash was $11.4 million, or $0.16 per unit, in the third quarter of 2009. For the third quarter, the Partnership and the Fund declared distributions of $0.03 per unit.

Third quarter 2009 net income improved $16.8 million when compared to the second quarter of 2009. NBSK pulp US dollar list prices increased by 14%, but were partially offset by a 6% strengthening of the Canadian dollar. Unit manufacturing costs decreased 7% when compared to the prior quarter due primarily to the absence of any scheduled maintenance downtime and lower chemical prices. The Partnership's cash position increased $25.6 million during the third quarter of 2009 due to positive cash generated from operations and a reduction in working capital. On September 30, 2009, the Partnership completed a new $40 million bank credit facility with a maturity date of November 30, 2011. In addition, the Partnership has arranged a $25 million letter of credit facility, subject to completion of legal documentation.

Pulp markets showed further improvement in the third quarter of 2009 as continued reduction of supply and steady improvement in demand have resulted in further reductions in inventory stocks and subsequent price increases. NBSK US dollar North American list prices were US$660 in June rising to US$770 in September with announced prices for October of US$800 and for November of US$830. Mitigating the impact of stronger global pulp markets for Canadian producers has been the steady strengthening of the Canadian dollar in relation to the US dollar.

There was no scheduled maintenance downtime at the Partnership's operations during the third quarter of 2009. For the fourth quarter, a planned maintenance outage in October at our Northwood facility was extended for additional work on the recovery boiler, and resulted in total reduced production levels of approximately 31,000 tonnes.

On October 9, 2009 the Canadian federal government announced the allocation of credits from the billion dollar Pulp and Paper Green Transformation Program (the Program). The Partnership has been allocated $122.2 million from the Program announced by the Canadian government on June 17, 2009. The Program is designed as a reimbursement of funds to be spent on qualifying energy and environmental capital projects. Credits may be used until the Program end date of March 31, 2012. The Partnership has identified and will be submitting a number of projects for Program approval. These projects are expected to provide economic and environmental benefits to the Partnership's operations.

On October 21, 2009, the Fund announced a cash distribution of $0.01 per Fund unit for the month of October, to be paid on November 15, 2009. The cash distribution for the month of November will be announced on or before November 19, 2009.

Source: Canfor Pulp Income Fund