Falling U.S. pulp and paper demand continued to erode first-quarter revenue and earnings for Canfor Pulp LP, which is 49.8% owned by Canfor Pulp Income Fund (TSX:CFX.UN)
First-quarter sales for the period ending March 31, 2009, fell 11.9% to $186.3 million from $211.4 million in the same quarter a year ago.
Lower demand has push down pulp prices over the past year. The company reported that pulp prices have fallen 15% since the fourth quarter of 2008 and 24% in the past year.
Earnings before income taxes and depreciation (EBITDA) has fallen to $2.2 million from $42.5 million in the first quarter of 2008 due to lower pulp prices, reduced production volumes and higher freight costs.
Overall, Canfor Pulp reported a net loss of $21.6 million compared with a net profit of $43.5 million in the same quarter a year ago. First-quarter losses, however, included $11.8 million of non-operating items, including a $3.9 million foreign exchange loss on translation of U.S. dollar denominated long-term debt and a $5.7 million charge relating to revaluation to market of outstanding natural gas and U.S.-dollar denominated working capital foreign exchange hedging contracts.
The company said it was difficult to predict future market conditions given how quickly the economy has been shifting over the past few months. However, pulp and paper demand is expected to remain under pressure in the short-term and potentially for the remainder of the year.
The company noted that the price for kraft paper will also decline modestly in domestic and offshore markets through the second quarter.
Canfor Pulp Income Fund's unit price range during the past week: between $2.02 and $2.61; 52-week high: $12.10; 52-week low: $1.30.