SFK 4Q Results:

Highlights
-Ebitda of 14.4 million for 4Q
- Acquisitions contributed an adjusted 4.2million EBITDA for 2 months of operations
- $684US realized prices for Q4, compared to $668 US in Q3. Average List price was $770US
- Cost per tonne decreased in 4Q due to lower fiber costs and delivery costs
-2.1 million in one time charges included in the quarter due to acquisition.
- Sales mix is 81% NA, 19% Europe, compared to 72%, 28%, respectively.

CapEx
-Expect 15 million in capital expenditure for 07.
- 10 million allocated to upgrade at NBSK mill which should boost production by 5%

Outlook
- .8777 Exchange Rate for 4Q, currently standing at .8495
- Prices have subsequently increased to $790US and a further $20 increase has been announced by many industry players for April.
- SFK implemented price increases for both pulp types at beginning of the year.
- Management feels RBK is mistakenly tied to Hardwood pulp prices, they believe it will develop into its own market index eventually because it has "up to 30% higher value softwood fibre and increasing demand from customers for more post consumer recycled content." Management hopes to capitalize on this by owning two of the very few RBK mills in the world. (45% of NA market share)

Overall, the results were mostly as expected. I am dissapointed that the realized prices are taking so long to match with list prices, but management has said they are basically working on it. Also, the decrease in costs is a great sign that we may see the discrepency in fiber costs between Western and Eastern Canada continue to fall. Management was positive about the future for the company. They continue to own one of the lowest operating cost NBSK pulp mills in the world, and they were able to purchase the RBK mills with a clear vision of its future potential for only 5x EBITDA.