April 27, 2010 / 4:09 PM / in 8 years

Canfor Pulp units hit 2-year high after Q1 results

* Units up as much as 13 pct

* Increases monthly distribution by 67 pct

April 27 (Reuters) - Units of Canada’s Canfor Pulp Income Fund CFX_u.TO rose to levels not seen in more than two years on Tuesday, a day after the company posted a quarterly profit that beat estimates and increased its monthly distribution by 67 percent.

The company said it expects the pulp market to remain strong through the second quarter, as inventories held by producers and customers were well below what is considered to be a balanced market.

With the supply-demand balance in favor of producers, there is potential for additional pulp price increases, Canfor Pulp said in a statement on Monday.

The company increased its monthly distribution to 20 Canadian cents per unit, from 12 Canadian cents per unit, payable on June 15 to unitholders of record on May 31.

For the first quarter, net income was C$16.5 million, or 47 Canadian cents per fund unit, compared with a loss of C$10.7 million, or 30 Canadian cents per unit, a year ago.

The quarter was helped by improved pulp prices, steady demand and reduced inventories.

Analysts on average were expecting the income fund to earn 43 Canadian cents per unit, according to Thomson Reuters I/B/E/S.

Units of the Vancouver, British Columbia-based company rose as much as 13 percent to C$15.59, before paring some gains to trade up 10 percent at C$15.27 in morning trade on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Maju Samuel)

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