WOODSTOCK, Ont. — Contrans reported declining revenue and profits for the second quarter and also announced it is converting from an income fund to a corporation.
The conversion to a corporate entity is expected to take place around Dec. 1, pending unitholder approval, the company reported.
Contrans also said it is continuing to cope with recessionary challenges. Net earnings for the second quarter were $6.2 million, down from $10.2 million in the same quarter of 2008. Over the first six months of 2009, net earnings were $7.7 million, down from $15.2 million over the first six months of 2008. Revenue was also down in the second quarter, from $129.7 million in 2008 to $87.4 million in 09.
“The current recession is continuing to have a profound impact on the global economy,” said Contrans chairman and CEO, Stan Dunford. “Its effects on the North American transportation industry have been reflected in greatly diminished shipping volumes. While our 2009 operating results have declined compared to 2008, the current year’s results have been buoyed by the diversity of Contrans’ operations and customer base.”
Dunford said the company has seen little evidence of an economic recovery and doesn’t anticipate a “significant improvement in the near term.” The company has suspended distribution payments.
Dunford also addressed the company’s intent to convert to a corporation.
“The Board believes that the advantages originally offered by the income trust model to Contrans and to its unitholders have been greatly diminished by the poor business environment,” he said. “Income trusts will be subject to taxation beginning in 2011 and, as that date draws nearer, the advantages of continuing as an income trust are disappearing.”
Despite the challenges facing the transportation industry, Dunford said “Contrans remains fundamentally sound and profitable. It possesses a solid balance sheet, the strength of which management is fiercely committed to preserving.”
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