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Press release from CNW Group

Algoma Central Corporation - Operating Results

Wednesday, November 02, 2011

Algoma Central Corporation - Operating Results16:52 EDT Wednesday, November 02, 2011TORONTO, Nov. 2, 2011 /CNW/ -For the Three and Nine Months Ended September 30, 2011 and 2010(Reported under International Financial Reporting Standards)(In thousand of dollars except per share data)     Three Months EndedSeptember 30 Nine Months Ended September 30       2011 2010 2011 2010Revenue     $184,234$108,111$397,640$270,728Net earnings     $35,003$17,126$35,486$10,863Basic earnings per common share     $9.00$4.40$9.12$2.79Dividends paid per common share     $0.45$0.45$1.35$1.35Third Quarter ResultsThe Corporation is reporting net earnings for the three months ended September 30, 2011 of $35,003 compared to net earnings of $17,126 for the same period in 2010.The increase was due primarily to the acquisition of the non-controlling interest in Seaway Marine Transport ("SMT"), improved overall operating results of the business units and the positive impact of a mark-to-market adjustment to recognize the fair value of certain foreign exchange contracts. Partially offsetting these improvements were the adverse impact of an increase in financing costs and an increase in foreign exchange losses resulting largely from translating U.S dollar denominated long-term debt net of cash on hand to Canadian dollars for reporting purposes.The Domestic Dry-Bulk segment's operating earnings net of income tax increased from $6,820 to $23,619. The improvement was due to the increase in the Corporation's share of earnings in SMT and an overall improvement in domestic dry-bulk operating results. Effective April 14, 2011, the Corporation acquired the Upper Lakes Group Inc. ("ULG") fleet of domestic dry-bulk vessels and its partnership interest in SMT and related entities ("the ULG Transaction") resulting in all of the earnings of SMT post acquisition being attributable to the Corporation compared to approximately 59% of the earnings prior to the acquisition. Operating results also improved due to an increase in operating days and an improved mix of cargoes for the fleet. Higher operating costs on certain vessels partially offset the improvement.The Product Tanker segment operating earnings net of income tax increased from $3,943 to $4,922 mainly as a result of more operating days due to an increase in market demand which was partially offset by an increase in direct operating expenses.The operating earnings net of income tax of the Ocean Shipping segment for the three months ended September 30, 2011 were $2,346 compared to $4,618 for the same period in 2010. The earnings for the 2011 third quarter were adversely affected by two regulatory dry-dockings, resulting in reduced revenue and higher operating expenses relating to the cost of the dry-dockings not eligible to be capitalized.Earnings and costs for 2010 were also reduced to reflect the impact of regulatory dry-dockings of three dry-bulk vessels in preparation for the transfer to Great Lakes dry-bulk service.The Real Estate segment operating earnings net of income tax decreased from $1,133 to $1,118.The decrease in earnings due to the loss on the translation of foreign- denominated monetary assets and liabilities was a result of the weakening of the Canadian dollar against the U.S. dollar from 1.04 at July 1, 2011 to 0.95 at September 30, 2011.Financial expense for the 2011 quarter was a credit of $4,855. The credit was a result of a mark-to-market adjustment of $8,474 recognizing the change in the period of the fair value of certain forward exchange contracts. Excluding this credit, financial expense would have been $3,619 compared to $464 in 2010. The increase is due to higher debt levels due primarily to the ULG transaction and additional amortization of costs related to financings.Nine-Month ResultsThe Corporation is reporting net earnings for the nine months ended September 30, 2011 of $35,486 compared to net earnings of $10,863 for the same period in 2010. The improvement was due primarily to the ULG Transaction, better results of all business units and a reversal recorded in the 2011 first quarter of an impairment charge taken in prior years. These increases were partially offset with higher financial expense and an increase in the loss on the translation of foreign-denominated assets and liabilities.The Domestic Dry-Bulk segment's operating earnings net of income tax improved from a loss of $5,475 in 2010 to earnings of $11,095 in 2011. The increase in earnings resulted from the ULG Transaction and improved fleet performance with a partial offset from an increase in operating costs on certain vessels.The Product Tanker segment operating earnings net of income tax increased from $5,658 to $9,916 mainly as a result of more operating days due to an increase in market demand which was partially offset with an increase in direct operating expenses.The operating earnings net of income tax of the Ocean Shipping segment increased to $9,387 in 2011 compared to $9,326 for the same period in 2010. In 2011, Ocean Shipping experienced a decrease in earnings due to regulatory dry-dockings on two vessels. In 2010, Ocean Shipping experienced decreases in earnings due to costs relating to the regulatory dry-dockings of the three vessels in preparation for the transfer to Great lakes dry-bulk service. During dry-dockings, the Corporation's earnings are reduced by both the loss of revenue days while the vessel is in transit to and from and in dry-dock, as well as a portion of the costs of the dry-docking that are not capitalized.The Real Estate segment operating earnings net of income tax increased from $2,517 to $2,735 due primarily to additional earnings realized from the hotel which was in operation for the full period in 2011.DividendsOn November 2, 2011, the Board of Directors declared a dividend of $0.45 per common share payable on December 1, 2011 to shareholders of record on November 17, 2011. For further information: Greg D. Wight, FCA  President and Chief Executive Officer  905-687-7850            Peter D. Winkley, CA Vice President, Finance and Chief Financial Officer 905-687-7897