MONTREAL: With new leadership and strong market conditions, SFK Pulp Fund says it's well-positioned for the future despite taking a hit from a strong Canadian dollar and higher waste paper prices.
"We're well positioned in the industry compared to our peers," said outgoing interim co-chief executive Paul Bourque.
Higher currency and paper costs caused the Quebec-based company's profits to fall by nearly 25% to $7.7 million.
Earnings for the three months ended March 31 were worth eight cents per unit, down from $10.2 million, or 12 cents per unit, in the same period last year.
Sales slipped to $131.6 million from $134.5 million, primarily from the St-Felicien mill.
SFK said productivity at its three mills—St-Felicien, Fairmont, W.Va., and Menominee, Mich.—came in above expectations with production rising to 189,000 tonnes from 183,000.
Higher US-dollar prices were offset by the strengthening of the Canadian dollar, which has increased by 17% in a year, Bourque said.
Demand for recycled products is also "very good" and operations have been helped by more stable waste paper prices since the quarter ended in March.
Productivity at its mills, in particular the facility in St-Felicien, exceeded expectations during the quarter, rebounding after a more difficult fourth quarter.
During the quarter, SFK completed ahead of schedule its $10 million unbleached pulp washing project. The endeavour is aimed at reducing chemical usage, improving the pulp quality and the environmental performance of Quebec mill.
The company and AbitibiBowater also entered into a second amendment to the fibre supply agreement running until 2013. It provides for the supply of about 83% of the St-Felicien mill's annual fibre requirement compared to about 80% under the first amendment.

© 2008 The Canadian Press