Fibrek Inc FBKZF

Q2 and outlook

[oddykog]

Fibrek earned 11 cents per share (before dilution due to the stock issue in July) .  The conference call with the Q2 results suggests that they expect sales to be reasonably steady for the remainder of the year with a slight downward bias to NBSK pricing as new mills start up.  Apparently inventories are still tight.

2 excellent profit enhancers are on the horizon: the refinancing and capital raising will reduce interest payments by $4 million per year with those savings coming in Q3 already.  Further they revealed during the conference call that fibre costs are expected to decline in Quebec for their NBSK operation, resulting in a cost saving in 2011 of $7 million.  They gave as the reason that the shutdowns of newsprint mills had changed the supply: demand balance in the province for wood chips in favor of Fibrek.

All in all, it is not impossible to project profits in the $30 million range for 2011, which leaves them priced at a PE of 4-5

[rationalexuberance]

impressive quarter; hopefully the share dilution will be counterbalanced by the removal of convertible debentures in december; looks like a screaming buy right now at $1.05

[woodstove]

Aren't the convertible debentures due in Dec-2011, not Dec-2010?  Cannot recall the date exactly.The principal owing ($51m) can be settled by issuance of shares, I believe.  That would mean additional shares outstanding.  Not a bad thing for the company, as it would improve equity/debt ratio.  Existing shareholders will get diluted, but at the then-market price (less 5 pct)