WOODSTOCK, Ont. — Contrans Income Fund credits its diversity for its ability to post strong Q2 financial results in the face of a challenging operating environment.
The company posted net earnings of $10.2 million for the three-month period ending June 30, compared to $1.5 million in the same period of 07. The six-month period resulted in a profit of $15.2 million compared to $9.6 million in the first half of last year.
“Contrans’ solid second quarter results are largely attributable to management’s ability to react quickly and effectively to changing market conditions,” said Stan Dunford, chairman and CEO of Contrans Income Fund. “In recent years we have acquired companies that have customer bases that are less susceptible to economic downturns. This has added to an already diverse customer base, something that has always made Contrans unique in the freight transportation industry.”
The company’s van segment was not immune to the economic slowdown, however. Van operations saw a $6.3 million revenue decline in Q2 and for the six-month period, van revenue dropped $11.5 million compared to 07. The closure of a major customer was blamed for much of the decrease, as was a drop in southbound freight.
While changes to taxation laws in Canada have prompted some income funds to consider converting to corporations, Dunford said Contrans has no plans to do so.
“The Department of Finance has recently published draft rules concerning the conversion of income trusts to corporations,” added Mr. Dunford. “Currently, we see no compelling reason for the Fund to convert back to a corporation before the proposed deadline that would enable trusts to convert on a tax-deferred basis. Even then, there may be as much reason to maintain the status quo as there may be to convert. Much will depend on the market’s reaction to those trusts that choose to convert to a corporation as well as the market’s reaction to those that remain as trusts. Management will continue to carefully monitor developments and their implications for Contrans’ unitholders.”
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