Fording Canadian Coal Trust 2006 first quarter earnings results
25 April 2006 - 10:16AM
PR Newswire (US)
CALGARY, April 24 /PRNewswire-FirstCall/ -- Fording Canadian Coal
Trust (TSX: FDG.UN, NYSE: FDG) today announced its first quarter
2006 results. Cash available for distribution for the quarter
nearly tripled to $202 million ($1.37 per unit) compared with $72
million ($0.49 per unit) in 2005. Net income was $165 million in
the first quarter, up from $65 million for the same quarter in
2005, largely due to higher metallurgical coal sales prices. Net
income before unusual items and future income taxes was $197
million compared with $60 million in 2005. "We had a good first
quarter because of high coking coal prices," said Jim Popowich,
President of Fording Canadian Coal Trust. "While we did not meet
all of our targets with respect to coal sales volumes and costs,
our distribution of $1.40 per unit was over three times what we
paid for the first quarter of 2005. Based on our current price
settlements for the 2006 coal year, we will see reduced coking coal
prices starting in the second quarter this year; however, prices
remain at historically high levels and will provide a good
foundation for distributions over the next three quarters."
Highlights for the First Quarter: - Elk Valley Coal settled coal
prices with substantially all of its customers for the coal year
commencing April 1, 2006 at an average price of US$107 per tonne.
Average calendar year prices are expected to increase to be US$112
per tonne. - Cash available for distribution increased to $202
million, or $1.37 per unit, from $72 million in 2005. Distributions
for the quarter were $1.40 per unit. Since the formation of the
Trust, distributable cash on a cumulative basis has exceeded
distributions to unitholders by $4 million. - The average coal
price in the first quarter of 2006 was US$122 per tonne, which was
double the price in the same quarter of 2005. Prices in Canadian
dollar terms increased 83% to $152 per tonne, and reflect a
stronger Canadian dollar. - Coal sales volumes decreased 9% from
first quarter 2005 levels to 3.1 million tonnes, due to customers
not taking deliveries of coal shipments as scheduled and to the
termination of contracts with the majority of customers in China. -
Elk Valley Coal's unit cost of product sold increased 36% to $38.60
compared with the first quarter of 2005 primarily due to higher
mining costs. - Unit transportation costs in Elk Valley Coal
increased 26% over the first quarter of 2005 to $37.80 and reflect
higher rail and port rates. ---------------------------------------
Conference Call and Webcast A conference call to discuss these
results will be held Tuesday, April 25 at 8:00 a.m. Mountain time,
10:00 a.m. Eastern time. To participate in the conference call,
please dial 1-800-814-3911 or 416-644-3416 approximately 10 minutes
prior to the call. A live and archived audio webcast of the
conference call will also be available on the Trust's website
http://www.fording.ca/. About Fording Canadian Coal Trust Fording
Canadian Coal Trust is an open-ended mutual fund trust. Through
investments in metallurgical coal and industrial minerals mining
and processing operations, the Trust makes quarterly cash
distributions to unitholders. The Trust, through its wholly owned
subsidiaries, holds a 60% interest in the Elk Valley Coal
Partnership and is a leading producer of the industrial mineral
wollastonite. Elk Valley Coal, comprised of Canada's senior
metallurgical coal mining properties, is the world's second largest
exporter of metallurgical coal, supplying high-quality coal
products to the international steel industry. The Trust's shares
are traded on the Toronto Stock Exchange under the ticker symbol
FDG.UN and on the New York Stock Exchange under the symbol FDG.
MANAGEMENT'S DISCUSSION AND ANALYSIS This management's discussion
and analysis, dated April 24, 2006, should be read in conjunction
with Fording Canadian Coal Trust's unaudited consolidated financial
statements and the notes thereto for the quarter ended March 31,
2006, management's discussion and analysis and consolidated
financial statements for the year ended December 31, 2005, and
other public disclosure documents of the Fording Canadian Coal
Trust and its predecessors. The Trust reports its financial
information in Canadian dollars and all monetary amounts set forth
herein are expressed in Canadian dollars unless otherwise stated.
Fording Canadian Coal Trust --------------------------- Fording
Canadian Coal Trust (the Trust) is an open-ended mutual fund trust
created pursuant to a declaration of trust and governed by the laws
of Alberta. The Trust does not carry on any active business. The
Trust directly and indirectly owns all of the interests of NYCO and
Fording LP, which holds a 60% interest in Elk Valley Coal. The
Trust uses the cash it receives from its investments to make
quarterly distributions to its unitholders. References to "we" and
"our" in management's discussion and analysis are to the Trust and
its subsidiaries. References to Elk Valley Coal are either to Elk
Valley Coal Partnership or to the Trust's Elk Valley Coal segment
as the context requires. Our Elk Valley Coal segment includes our
interest in the Elk Valley Coal Partnership and certain financial
transactions of our subsidiaries that relate to the segment, such
as foreign currency hedging activity and mineral taxes. Elk Valley
Coal --------------- Elk Valley Coal is a general partnership
between Fording LP and Teck Cominco. Teck Cominco is the managing
partner of Elk Valley Coal and is responsible for managing its
business and affairs, subject to certain matters that require the
agreement of all partners. Our consolidated financial statements
reflect our proportionate interest in Elk Valley Coal. Elk Valley
Coal is the second largest supplier of seaborne hard coking coal in
the world. Hard coking coal is a type of metallurgical coal that is
used primarily for making coke by integrated steel mills, which
account for approximately 60% of worldwide steel production. The
seaborne hard coking coal market is characterized by the global
nature of international steel making, the relative concentration of
quality metallurgical coal deposits in Australia, Canada and the
United States and the comparatively low cost of seaborne
transportation. Elk Valley Coal has an interest in six mining
operations. The Fording River, Coal Mountain, Line Creek and
Cardinal River operations are wholly owned. The Greenhills
operations are a joint venture in which Elk Valley Coal has an 80%
interest. Effective August 1, 2005, the Elkview operations were
contributed to the Elkview Mine Limited Partnership in which Elk
Valley Coal owns, directly and indirectly, a 95% general
partnership interest. NYCO ---- NYCO consists of subsidiaries of
the Trust that operate wollastonite mining operations in New York
State and Mexico, and a tripoli mining operation in Missouri. NYCO
is a leading producer of wollastonite. Wollastonite is an
industrial mineral that is used in the manufacture of automotive
composites, adhesives and sealants, metallurgical fluxes, friction
material, paints and corrosion-resistant coatings, fire-resistant
construction wallboard, cement-based products and ceramics. Tripoli
is an industrial mineral that is used primarily in buffing and
polishing applications. Non-GAAP Financial Measures
--------------------------- This management's discussion and
analysis refers to certain financial measures, such as
distributable cash, cash available for distribution, sustaining
capital expenditures, and net income before unusual items and
future income taxes, that are not measures recognized under GAAP in
Canada or the United States, and do not have standardized meanings
prescribed by GAAP. These measures may differ from those made by
other issuers and, accordingly, may not be comparable to such
measures as reported by other trusts or corporations. We discuss
these measures, which have been derived from our financial
statements and applied on a consistent basis, because we believe
that they are of assistance in the understanding of the results of
our operations and financial position and are relevant measures of
the ability of the Trust to earn and distribute cash to
unitholders. Caution on Forward-looking Information
-------------------------------------- This management's discussion
and analysis contains forward-looking information within the
meaning of the United States Private Securities Litigation Reform
Act of 1995 relating, but not limited to, the Trust's expectations,
intentions, plans and beliefs. Forward-looking information can
often be identified by forward-looking words such as "anticipate",
"believe", "expect", "goal", "plan", "intend", "estimate", "may",
and "will" or similar words suggesting future outcomes, or other
expectations, beliefs, plans, objectives, assumptions, intentions
or statements about future events or performance. This management's
discussion and analysis contains forward- looking information,
included in, but not limited to, the sections titled 'Overview',
'Results of Operations', 'Liquidity and Capital Resources',
'Outlook', and 'Changes in Accounting Policies'. Unitholders and
prospective investors are cautioned not to place undue reliance on
forward-looking information. By its nature, forward-looking
information involves numerous assumptions, known and unknown risks
and uncertainties, of both a general and specific nature, that
could cause actual results to differ materially from those
suggested by the forward-looking information or contribute to the
possibility that predictions, forecasts or projections will prove
to be materially inaccurate. For a further discussion of the
assumptions, risks and uncertainties relating to the
forward-looking statements contained in this management's
discussion and analysis, please refer to the sections entitled
Caution Regarding Forward-Looking Statements. Overview -------- The
table below summarizes our financial results and some of our key
operating statistics on a consolidated basis.