Chemtrade Logistics Income Fund, symbol CHE.UN on Toronto, is one of North America’s largest suppliers of sulphuric acid, sulphur, liquid sulphur oxide and sodium hydrosulphite. It also supplies sodium chlorate, phosphorous pentasulphide and zinc oxide. In addition to selling chemicals, Chemtrade processes spent acid.

Chemtrade has three divisions: the Sulphur Products and Performance Chemicals division supplies 54.5% of the income trust’s revenue. Pulp Chemicals accounts for 8.5% of revenue. The International division supplies the remaining 37.0%. This division removes and markets sulpur and sulphuric acid outside of North America.

In the three months ended December 31, 2010, the income trust’s cash flow per unit fell 31.7%, to $0.28 from $0.41 a year earlier. This was partly due to reduced production from a few of its larger sulphuric-acid plants, especially the plant in Beaumont, Texas, which had been damaged by a fire in 2008. That plant was shut down for half of the fourth quarter, forcing the company to use higher-cost supply sources and routes to make deliveries to customers.

Also, insurance recovery from the fire and exchange rates increased the income trust’s income in the fourth quarter of 2009. That made the 2010 fourth-quarter results worse by comparison.

However, higher sulphur prices and demand for sulphuric acid pushed revenue 13.9% higher, to $151.3 million from $132.8 million.

Chemtrade pays a $0.10 monthly distribution, which yields 8.6% on an annualized basis. The fund paid out 89.5% of its cash flow to unitholders in 2010. However, its 2011 payout ratio will fall to an estimated 80%.

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