Canexus -the terminal operator
On March13,2014 Canexus posted it's fourth quarter and annual results.Annual operating profit was down from 2012.But Canexus has just started the pipeline connected to unit trains in mid-December and in order to pay for it floated a $150 million equity issue.It has four main operations:sodium chlorate ops.,chlkor-alkali ops,Brazilian ops.and it's new train terminal operations.Sodium chlorate and the Brazilian operations showed a profit while the other two showed a loss for the quarter.The terminal operations showed a smaller loss in Q4 2013than in 2012 and it is still not completed yet. It will shut down in June for 60 to 90 days to finish operations.On the other hand the truck to rail terminal expansion was completed in 2013.The transload rate for truck was 16,200 in Q4 but 23,800 barrels per day in Q3.The transload rate will be lower in Q1 2014 due to bad weather but in February,2014 was 27,100 barrels per day.It needs to continue at this transload rate or higher in the spring. However the price of it's shares has moved down recently partly because Canexus issued $150 million in new equity and this dilutes earnings per share.
2014 results
Canexus had an interim year with interim results in 2013.It made almost 50% of it's profit on sodium chlorate and another 12% on it's Brazilian operations.But it took a loss on it's terminal operations for the year and again for the last quarter.Now the truck to rail expansion is finished and the unit train operations should be finished in August.Canexus believes that it should have meaningful results for the terminal operations in 2014(certainly by the third quarter).Canexus has just changed it's senior management and they will be tested in 2014.Will chlor-alkali continue to lose money in the next three quarters and will their terminal operations start to make profit by the second, third or fourth quarter?It is too soon to start thinking about divesting the chlor-alkali operations especially as the price has just increased.But Canexus needs to reduce it's debt and may want to buy back shares to get it's price back to where it was two months ago.If Canexus wants to reduce debt or buy back equity then management needs to decide whether chlor-alkali is a core asset. Canexus also needs to know whether the truck to rail operations can move up from it's Q4 average(16,200 barrels) to it's February average of ( 27,100 barrels) in order to support the unit train operations for two months of a shutdown.The stated increase in the price of Western Canadian Select oil will help fill the truck to train terminal. If this happens then expect Canexus shares to move back up towards $6.50 a share. for advice or comments on transportation companies send comments to daleandmac@gmail.com
2014 results
Canexus had an interim year with interim results in 2013.It made almost 50% of it's profit on sodium chlorate and another 12% on it's Brazilian operations.But it took a loss on it's terminal operations for the year and again for the last quarter.Now the truck to rail expansion is finished and the unit train operations should be finished in August.Canexus believes that it should have meaningful results for the terminal operations in 2014(certainly by the third quarter).Canexus has just changed it's senior management and they will be tested in 2014.Will chlor-alkali continue to lose money in the next three quarters and will their terminal operations start to make profit by the second, third or fourth quarter?It is too soon to start thinking about divesting the chlor-alkali operations especially as the price has just increased.But Canexus needs to reduce it's debt and may want to buy back shares to get it's price back to where it was two months ago.If Canexus wants to reduce debt or buy back equity then management needs to decide whether chlor-alkali is a core asset. Canexus also needs to know whether the truck to rail operations can move up from it's Q4 average(16,200 barrels) to it's February average of ( 27,100 barrels) in order to support the unit train operations for two months of a shutdown.The stated increase in the price of Western Canadian Select oil will help fill the truck to train terminal. If this happens then expect Canexus shares to move back up towards $6.50 a share. for advice or comments on transportation companies send comments to daleandmac@gmail.com
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