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Methanex Corporation (MX)
Market: CDN Consolidated
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Oct 24, 2014, 11:53 AM EDT
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VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 28, 2009) - For the first quarter of 2009, Methanex (TSX:MX)(NASDAQ:MEOH)(SANTIAGO:Methanex) reported Adjusted EBITDA(1) of $13.1 million and a net loss of $18.4 million ($0.20 per share on a diluted basis). This compares with Adjusted EBITDA of negative $13.3 million and a net loss of $3.9 million ($0.04 per share on a diluted basis) for the fourth quarter of 2008.

Bruce Aitken, President and CEO of Methanex, commented, "Despite the current environment of weaker demand and lower methanol prices, we generated positive cash flow from operations during the first quarter. In addition, our first quarter results would normally have been higher, however our cost structure had not fully adjusted from the higher methanol price environment last year and this negatively impacted our results."

Mr. Aitken added, "Global methanol demand stabilized during the first quarter, and we have seen some improvement in demand recently, particularly in China where imports have increased significantly over the past few months. Entering the second quarter, our average posted contract price has decreased marginally, as prices in Europe and North America have trended downward, while the price in Asia has strengthened."

Mr. Aitken concluded, "With US$313 million of cash on hand at the end of the quarter, low leverage, no near term refinancing requirements and a US$250 million undrawn credit facility, we are in a strong financial position and we are committed to maintaining financial strength and flexibility to meet our financial commitments through this period of uncertainty and continue to invest to grow the Company."

A conference call is scheduled for April 29, 2009 at 11:00 am ET (8:00 am PT) to review these first quarter results. To access the call, dial the Telus Conferencing operator ten minutes prior to the start of the call at (416) 883-7132, or toll free at (888) 205-4499. The passcode for the call is 45654. A playback version of the conference call will be available for fourteen days at (877) 245-4531. The reservation number for the playback version is 668311. There will be a simultaneous audio-only webcast of the conference call, which can be accessed from our website at www.methanex.com. In addition, an audio recording of the conference call can be downloaded from our website for three weeks after the call.

Methanex is a Vancouver based, publicly traded company engaged in the worldwide production, distribution and marketing of methanol. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "MX", on the NASDAQ Global Market in the United States under the trading symbol "MEOH", and on the foreign securities market of the Santiago Stock Exchange in Chile under the trading symbol "Methanex". Methanex can be visited online at www.methanex.com.

FORWARD-LOOKING STATEMENTS

Information contained in this press release and the attached First Quarter 2009 Management's Discussion and Analysis contains forward-looking statements with respect to us and the chemical industry. Statements that include the words "believes", "expects", "may", "will", "should", "seeks", "intends", "plans", "estimates", "anticipates", or the negative version of those words or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements.

However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including the on-time and on-budget completion of our new methanol joint venture project in Egypt, the ability to successfully carry out corporate initiatives and strategies, conditions in the methanol and other industries, fluctuations in supply, demand and price for methanol and its derivatives, including demand for methanol for energy uses, the price of oil, the success of natural gas exploration and development activities in southern Chile and New Zealand and our ability to obtain any additional gas in those regions on commercially acceptable terms, actions of competitors and suppliers, actions of governments and governmental authorities, changes in laws or regulations, world-wide economic conditions and other risks described in our 2008 Management's Discussion and Analysis and the attached First Quarter 2009 Management's Discussion and Analysis. In addition to the foregoing risk factors, the current global financial crisis and its impact on global economies has added additional risks and uncertainties including changes in capital markets and corresponding effects on the company's investments, our ability to access existing or future credit and defaults by customers, suppliers or insurers.

Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one's own due diligence and judgment. The outcomes anticipated in forward-looking statements may not occur and we do not undertake to update forward-looking statements.

(1) Adjusted EBITDA is a non-GAAP measure that does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and therefore is unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-GAAP Measures in the attached First Quarter 2009 Management's Discussion and Analysis for a description of each supplemental non-GAAP measure and a reconciliation to the most comparable GAAP measure.

Interim Report

For the Three Months Ended March 31, 2009

At April 28, 2009 the Company had 92,039,492 common shares issued and outstanding and stock options exercisable for 2,770,375 additional common shares.

Share Information

Methanex Corporation's common shares are listed for trading on the Toronto Stock Exchange under the symbol MX, on the Nasdaq Global Market under the symbol MEOH and on the foreign securities market of the Santiago Stock Exchange in Chile under the trading symbol Methanex.


Transfer Agents & Registrars
CIBC Mellon Trust Company
320 Bay Street
Toronto, Ontario, Canada M5H 4A6
Toll free in North America: 1-800-387-0825

Investor Information
All financial reports, news releases and corporate information can be
accessed on our website at www.methanex.com.

Contact Information
Methanex Investor Relations
1800 - 200 Burrard Street
Vancouver, BC Canada V6C 3M1

E-mail: invest@methanex.com
Methanex Toll-Free: 1-800-661-8851

FIRST QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS

Except where otherwise noted, all currency amounts are stated in United States dollars.

This First Quarter 2009 Management's Discussion and Analysis dated April 28, 2009 should be read in conjunction with the 2008 Annual Consolidated Financial Statements and the Management's Discussion and Analysis included in the Methanex 2008 Annual Report. The Methanex 2008 Annual Report and additional information relating to Methanex is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.


                                                     Three Months Ended
                                              ----------------------------
                                               Mar 31    Dec 31     Mar 31
($ millions, except where noted)                 2009      2008       2008
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Sales volumes (thousands of tonnes)
 Produced methanol                              1,000       829        678
 Purchased methanol                               270       435        669
 Commission sales (1)                             131       134        143
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 Total sales volumes                            1,401     1,398      1,490

Methanex average non-discounted
 posted price ($ per tonne) (2)                   216       388        703
Average realized price ($ per tonne) (3)          199       321        545
Adjusted EBITDA (4)                              13.1     (13.3)     126.2
Cash flows from operating activities             67.9      49.7      109.1
Cash flows from operating activities before
 changes in non-cash working capital (4)          4.8     (34.7)     100.9
Operating income (loss) (4)                     (15.8)    (39.7)     103.1
Net income (loss)                               (18.4)     (3.9)      64.6
Basic net income (loss) per common share        (0.20)    (0.04)      0.66
Diluted net income (loss) per common share      (0.20)    (0.04)      0.66
Common share information (millions of shares):
 Weighted average number of common shares        92.0      92.6       97.2
 Diluted weighted average number of
  common shares                                  92.0      92.7       97.5
 Number of common shares outstanding,
  end of period                                  92.0      92.0       95.6
--------------------------------------------------------------------------

1  Commission sales represent volumes marketed on a commission basis.
   Commission income is included in revenue when earned.

2  Methanex average non-discounted posted price represents the average of
   our non-discounted posted prices in North America, Europe and Asia
   Pacific weighted by sales volume. Current and historical pricing
   information is available at www.methanex.com.

3  Average realized price is calculated as revenue, net of commissions
   earned, divided by the total sales volumes of produced and purchased
   methanol.

4  These items are non-GAAP measures that do not have any standardized
   meaning prescribed by Canadian generally accepted accounting principles
   (GAAP) and therefore are unlikely to be comparable to similar measures
   presented by other companies. Refer to Additional Information -
   Supplemental Non-GAAP Measures for a description of each non-GAAP
   measure and a reconciliation to the most comparable GAAP measure.

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PRODUCTION SUMMARY


                                   Q1 2009              Q4 2008     Q1 2008
(thousands of tonnes)      Capacity(1)  Production   Production  Production
---------------------------------------------------------------------------
Chile I, II, III and IV           960          228          272         309
Titan (Trinidad)                  213          223          225         217
Atlas (Trinidad)
 (63.1% interest)                 268          204          269         293
New Zealand(2)                    350          194          200         120
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                                1,791          849          966         939
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1  The production capacities for our Trinidad plants are stated at
   original nameplate capacity. These facilities are able to operate above
   original nameplate capacity as a result of efficiencies gained through
   improvements and experience at these plants. The production capacity
   for our facilities in Chile and New Zealand may be higher than original
   nameplate capacity as, over time, these figures have been adjusted to
   reflect ongoing operating efficiencies at these facilities.

2  In October 2008, we restarted one of our two idled 900,000 tonne per
   year facilities at our Motunui site in New Zealand and we idled our
   530,000 tonne per year Waitara Valley facility. We have the
   flexibility to operate the Motunui plant or the Waitara Valley plant,
   both, or neither, depending on methanol supply and demand dynamics and
   the availability of natural gas on commercially acceptable terms and
   accordingly, we have included both of these facilities in the
   production capacity for New Zealand. We have excluded the second
   Motunui facility from production capacity in New Zealand as we
   currently do not intend to restart this facility.

Chile

Our methanol facilities in Chile produced 228,000 tonnes during the first quarter of 2009 compared with 272,000 tonnes during the fourth quarter of 2008. Production from our Chile facilities for the first quarter of 2009 was lower compared with the fourth quarter of 2008 primarily due to an unplanned outage in February which resulted in lost production of approximately 35,000 tonnes.

We are currently operating our methanol facilities in Chile at approximately 30% of capacity due to curtailments of our natural gas supply from Argentina - refer to the Management's Discussion and Analysis included in our 2008 Annual Report for more information.

Our goal is ultimately to return to operating all four of our plants in Chile with natural gas from suppliers in Chile. We are pursuing investment opportunities with the state-owned energy company Empresa Nacional del Petroleo (ENAP), GeoPark Chile Limited (GeoPark) and others to help accelerate natural gas exploration and development in southern Chile. During 2007, we signed an agreement with GeoPark under which we provided $40 million in financing to support and accelerate GeoPark's natural gas exploration and development activities in the Fell block in southern Chile. GeoPark has agreed to supply us with all natural gas sourced from the Fell block under a ten-year exclusive supply arrangement. GeoPark has continued to increase deliveries to our plants in Chile and for the first quarter of 2009 approximately 30% of total production at our Chilean facilities was produced with natural gas from the Fell block. In May 2008, we signed an agreement with ENAP to accelerate natural gas exploration and development in the Dorado Riquelme exploration block in southern Chile and to supply natural gas to our production facilities in Chile. Under the arrangement, we expect to contribute approximately $100 million in capital over the next two to three years to fund a 50% participation in the block. The arrangement is subject to approval by the government of Chile, which we expect to receive in the first half of 2009. As at March 31, 2009, we had contributed $50 million of the total expected capital of $100 million for the Dorado Riquelme block. Approximately $33 million has been placed in escrow until final approval from the government is received and approximately $17 million has been paid to fund development and exploration activities. We have been receiving some natural gas deliveries from the Dorado Riquelme block since May 2008 and we expect natural gas supply from this block to increase over time.

We continue to pursue other investment opportunities to help accelerate natural gas exploration and development in areas of southern Chile. In late 2007, the government of Chile completed an international bidding round to assign oil and natural gas exploration areas that lie close to our production facilities and announced the participation of five international oil and gas companies. Under the terms of the agreements from the bidding round there are minimum investment commitments. Planning and exploration activities have commenced. In July 2008, we announced that under the international bidding round, the Otway exploration block in southern Chile was awarded to a consortium that includes Wintershall, GeoPark, and Methanex. Wintershall and GeoPark each own a 42% interest in the consortium and we own a 16% interest. Exploration work is expected to commence by the end of this year upon receipt of certain government approvals. The minimum exploration investment committed in the Otway block by the consortium for the first phase is $11 million over the next three years.

We cannot provide assurance that ENAP, GeoPark or others will be successful in the exploration and development of natural gas or that we will obtain any additional natural gas from suppliers in Chile on commercially acceptable terms.

Trinidad

Our methanol facilities in Trinidad represent over 2.0 million tonnes of competitive cost annual capacity. Our methanol facilities in Trinidad produced a total of 427,000 tonnes during the first quarter of 2009 compared with 494,000 tonnes during the fourth quarter of 2008. We completed planned turnaround activities at our Atlas facility in February and this reduced production by approximately 75,000 tonnes.

New Zealand

Our New Zealand facilities produced 194,000 tonnes during the first quarter of 2009 compared with 200,000 tonnes during fourth quarter of 2008.

In early October 2008, we restarted one of our two idled 900,000 tonne per year facilities at our Motunui site in New Zealand and we idled our smaller scale 530,000 tonne Waitara Valley facility. We have the flexibility to operate the Motunui plant or the Waitara Valley plant or both depending on methanol supply and demand dynamics and the availability of natural gas on commercially acceptable terms.

EARNINGS ANALYSIS

Our operations consist of a single operating segment - the production and sale of methanol. In addition to the methanol that we produce at our facilities, we also purchase and re-sell methanol produced by others and we sell methanol on a commission basis. We analyze the results of all methanol sales together. The key drivers of changes in our Adjusted EBITDA for methanol sales are average realized price, sales volume and cash costs.

For a further discussion of the definitions and calculations used in our Adjusted EBITDA analysis, refer to How We Analyze Our Business.

For the first quarter of 2009, we recorded Adjusted EBITDA of $13.1 million and a net loss of $18.4 million ($0.20 per share on a diluted basis). This compares with Adjusted EBITDA of negative $13.3 million and a net loss of $3.9 million ($0.04 per share on a diluted basis) for the fourth quarter of 2008 and Adjusted EBITDA of $126.2 million and net income of $64.6 million ($0.66 per share on a diluted basis) for the first quarter of 2008.

During the fourth quarter of 2008, as a result of the major slowdown in the global economy there was a significant reduction in global demand for methanol and an increase in global inventories. This impacted our business through lower sales volumes and lower methanol pricing during the fourth quarter of 2008 and into early 2009. In addition, these factors resulted in a pre-tax charge to earnings of $33 million related to a write-down of our inventory value to estimated net realizable value at December 31, 2008. Our costs were higher for the first quarter of 2009 than would be expected at first quarter pricing levels due to the lag impact of selling opening inventory at costs that are higher than the costs incurred to produce or purchase methanol in the first quarter of 2009.

Adjusted EBITDA

The increase (decrease) in Adjusted EBITDA resulted from changes in the following:


                                                  Q1 2009          Q1 2009
                                            compared with    compared with
($ millions)                                      Q4 2008          Q1 2008
--------------------------------------------------------------------------
Average realized price                    $          (156) $          (440)
Sales volumes                                           -               (8)
Total cash costs                                      149              335
Inventory write-down charge                            33                -
--------------------------------------------------------------------------
                                          $            26  $          (113)
--------------------------------------------------------------------------

Average realized price


                                                     Three Months Ended
                                              ----------------------------
                                               Mar 31    Dec 31     Mar 31
($ per tonne, except where noted)                2009      2008       2008
--------------------------------------------------------------------------

Methanex average non-discounted
 posted price (1)                                 216       388        703
Methanex average realized price                   199       321        545
Average discount                                    8%       17%        22%
--------------------------------------------------------------------------

1  Methanex average non-discounted posted price represents the average of
   our non-discounted posted prices in North America, Europe and Asia
   Pacific weighted by sales volume. Current and historical pricing
   information is available at www.methanex.com.

During the fourth quarter of 2008, the global economic slowdown led to a sudden and significant reduction in global methanol demand and an increase in global inventories. This resulted in a decrease in contract methanol pricing during the fourth quarter of 2008 and into 2009. During the first quarter of 2009 methanol pricing remained relatively stable. Our average non-discounted posted price for the first quarter of 2009 was $216 per tonne compared with $388 per tonne for the fourth quarter of 2008 and $703 per tonne for the first quarter of 2008. Our average realized price for the first quarter of 2009 was $199 per tonne compared with $321 per tonne for the fourth quarter of 2008 and $545 per tonne for the first quarter of 2008. The decrease in our average realized price for the first quarter of 2009 compared with these periods decreased our Adjusted EBITDA by $156 million and $440 million, respectively.

For the first quarter of 2009 our average realized price was approximately 8% lower than our average non-discounted posted price. This compares with approximately 17% lower for the fourth quarter of 2008 and 22% lower for the first quarter of 2008. We have entered into long-term contracts for a portion of our production volume with certain global customers where prices are either fixed or linked to our costs plus a margin and accordingly, the discount from our average non-discounted posted prices for the first quarter of 2009 is lower than the comparable periods above as a result of lower methanol pricing.

Sales volumes

Total methanol sales volumes excluding commission sales volumes for the first quarter of 2009 were higher by 6,000 tonnes compared with the fourth quarter of 2008 and lower by 77,000 tonnes compared with the first quarter of 2008. This resulted in lower Adjusted EBITDA by $8 million for the first quarter of 2009 compared with the first quarter of 2008.

Total cash costs

The primary driver of changes in our total cash costs are changes in the cost of methanol we produce at our facilities and changes in the cost of methanol we purchase from others. Our production facilities are underpinned by natural gas purchase agreements with pricing terms that include base and variable price components. The variable component is adjusted in relation to changes in methanol prices above pre-determined prices at the time of production. We supplement our production with methanol produced by others through methanol offtake contracts and on the spot market to meet customer needs and support our marketing efforts within the major global markets. We have adopted the first-in, first-out method of accounting for inventories and it generally takes between 30 and 60 days to sell the methanol we produce or purchase. Accordingly, the changes in Adjusted EBITDA as a result of changes in natural gas costs and purchased methanol costs will depend on changes in methanol pricing and the timing of inventory flows.

Total cash costs for the first quarter of 2009 were lower compared with the fourth quarter of 2008 and the first quarter of 2008 by $149 million and $335 million, respectively. Natural gas costs on sales of produced methanol were lower during the first quarter of 2009 compared with the fourth quarter of 2008 and the first quarter of 2008 by $64 million and $89 million, respectively, primarily as a result of the impact of lower methanol pricing. Purchased methanol costs were also lower as a result of the impact of lower methanol pricing during the first quarter of 2009 compared with the fourth quarter of 2008 and the first quarter of 2008 and this resulted in lower cash costs by $52 million and $113 million, respectively. Purchased methanol represented a lower proportion of our overall sales volumes during the first quarter of 2009 compared with the fourth quarter of 2008 and the first quarter of 2008 and this resulted in lower cash costs by approximately $32 million and $128 million, respectively. During the first quarter of 2009, we made the decision to reduce the work force for our Chilean operations by approximately 15%, or 37 employees. As a result, we accrued approximately $4 million in severance and termination costs during the first quarter of 2009. We made a similar decision related to our Chilean operations during the first quarter of 2008.

For the first quarter of 2009 compared with the fourth quarter of 2008, other changes in cash costs were lower selling, general and administrative expenses primarily as a result of lower travel, consulting and other costs and lower ocean freight costs primarily as a result of lower fuel costs. For the first quarter of 2009 compared with the first quarter of 2008, other changes in cash costs were lower selling, general and administrative expenses primarily as a result of lower stock-based compensation costs due to the impact of changes in our share price as well as lower travel, consulting and other costs.

Inventory write-down charge

We record inventory at lower of cost and estimated net realizable value. The carrying value of our inventory, for both produced methanol as well as methanol we purchase from others, will reflect methanol pricing at the time of production or purchase and this will differ from methanol pricing at period end. Methanol prices fell sharply in late 2008 and early 2009 and in the fourth quarter of 2008, we recorded a pre-tax charge to earnings of $33 million to write-down the carrying value of inventory to estimated net realizable value at December 31, 2008.

Depreciation and Amortization

Depreciation and amortization was $29 million for the first quarter of 2009 compared with $26 million for the fourth quarter of 2008. The increase in depreciation and amortization for the first quarter of 2009 compared with the fourth quarter of 2008 is primarily due to higher sales volumes of produced methanol which includes depreciation charges.

Interest Expense


                                                     Three Months Ended
                                              ----------------------------
                                               Mar 31    Dec 31     Mar 31
($ millions)                                     2009      2008       2008
--------------------------------------------------------------------------

Interest expense before capitalized interest  $    15  $     14  $      14
Less capitalized interest                          (7)       (5)        (3)
--------------------------------------------------------------------------

Interest expense                              $     8  $      9  $      11
--------------------------------------------------------------------------

Interest expense before capitalized interest for the first quarter of 2009 was $15 million compared with $14 million for both the fourth quarter of 2008 and the first quarter of 2008. We have limited recourse debt of $530 million for our joint venture project to construct a 1.3 million tonne per year methanol facility in Egypt. Interest costs related to this project are capitalized.

Interest and Other Income (Expense)


                                                     Three Months Ended
                                              ----------------------------
                                               Mar 31    Dec 31     Mar 31
($ millions)                                     2009      2008       2008
--------------------------------------------------------------------------

Interest and other income (expense)           $    (4) $     (2) $      (1)
--------------------------------------------------------------------------

Interest and other income (expense) for the first quarter of 2009 was an expense of $4 million compared with an expense of $2 million for the fourth quarter of 2008. For the first quarter of 2009, our interest and other income (expense) included a foreign exchange loss of approximately $4 million. The change in interest and other income (expense) during the first quarter of 2009 compared with the fourth quarter of 2008 and the first quarter of 2008 was primarily due to lower interest income on cash balances as well as changes in foreign exchange gains and losses.

Income Taxes

The effective tax rate for the first quarter of 2009 was 32% compared with 29% for the first quarter of 2008.

The statutory tax rate in Chile and Trinidad, where we earn a substantial portion of our pre-tax earnings, is 35%. Our Atlas facility in Trinidad has partial relief from corporation income tax until 2014. In Chile the tax rate consists of a first tier tax that is payable when income is earned and a second tier tax that is due when earnings are distributed from Chile. The second tier tax is initially recorded as future income tax expense and is subsequently reclassified to current income tax expense when earnings are distributed.

SUPPLY/DEMAND FUNDAMENTALS

During the fourth quarter of 2008, the global financial crisis and weak economic environment led to a major reduction in global demand for most traditional methanol derivatives (which make up approximately 70% of global methanol demand). While there has been some softness in methanol demand into DME, overall demand into energy related derivatives, including MTBE, have remained relatively stable. Overall, we estimate global methanol demand declined by about 15% in the fourth quarter of 2008 compared to the third quarter of 2008. During the first quarter of 2009 global methanol demand remained at similar levels compared with the fourth quarter and we estimate total global demand is currently approximately 36 million tonnes measured on an annualized basis. In reaction to this decrease in demand, many high cost methanol plants have been operating at lower rates or have shut down, particularly in China, where we estimate approximately 6 million tonnes of high cost methanol production capacity shut down during the fourth quarter of 2008 and remained shut down during the first quarter of 2009. Net imports into China have increased significantly to displace some of the domestic production that has been shut down. In reaction to this decrease in demand, there was a significant decrease in spot and contract methanol pricing during the fourth quarter of 2008 and at the beginning of the first quarter of 2009. During the first quarter, pricing stabilized and our average non-discounted posted pricing in April was approximately $210 per tonne. In recent weeks, we have seen a modest improvement in global demand and spot prices have increased in all major regions.


Methanex Non-Discounted Regional Posted Prices(1)

                                  Apr          Mar          Feb         Jan
(US$ per tonne)                  2009         2009         2009        2009
---------------------------------------------------------------------------
United States                     200          216          233         233
Europe(2)                         193          220          220         220
Asia                              230          215          200         200
---------------------------------------------------------------------------

1  Discounts from our posted prices are offered to customers based on
   various factors.

2  EUR146.5 for Q2 2009 (Q1 2009 - EUR159) converted to United States
   dollars.
---------------------------------------------------------------------------

The next increments of world scale capacity additions outside of China are two 1.7 million tonne per year plants in Malaysia and Iran. The Malaysian plant is in the process of starting up and we expect product from this plant to be available during the first half of 2009. We expect product from the Iranian plant to be available to the market in the second half of 2009.

The weak economic environment poses significant uncertainty for our business and the future demand for methanol. Methanol demand into traditional derivatives is correlated to industrial production and we believe that methanol demand into traditional derivatives should improve when the macro economic environment improves. Over the past two years, high energy prices have driven demand for methanol into emerging energy applications such as gasoline blending and DME, primarily in China. While demand into these derivatives in China has remained steady during the recent lower energy price environment, we believe demand potential into these emerging energy derivatives will be stronger in a higher energy price environment.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities in the first quarter of 2009 were $68 million compared with $109 million for the same period in 2008. The change in cash flows for the first quarter of 2009 compared with the first quarter of 2008 is primarily a result of lower earnings and the changes in net working capital position. For the first quarter of 2009 we had a net working capital inflow of $63 million compared with a net working capital inflow of $8 million for the first quarter of 2008. The changes in non-cash working capital are primarily driven by the impact of changes in methanol pricing on our non-cash working capital balances, changes in inventory levels and timing of cash payments and collections.

During the first quarter of 2009, we paid a quarterly dividend of US$0.155 per share, or $14 million.

We are constructing a 1.3 million tonne per year methanol facility in Egypt. We expect the methanol facility to begin operations in early 2010. We own 60% of Egyptian Methanex Methanol Company S.A.E. ("EMethanex") which is the company that is developing the project and we will sell 100% of the methanol from the facility. We account for our investment in EMethanex using consolidation accounting. This results in 100% of the assets and liabilities of EMethanex being included in our financial statements. The other investors' interest in the project is presented as "non-controlling interest". During the first quarter of 2009, total plant and equipment construction costs related to our project in Egypt were $86 million. EMethanex has limited recourse debt of $530 million. As at March 31, 2009, a total of $366 million of this limited recourse debt has been drawn with $45 million being drawn during the first quarter of 2009. The total estimated future costs to complete the project, including capitalized interest related to the project financing and excluding working capital, are expected to be approximately $260 million. Our 60% share of future equity contributions, including capitalized interest related to the project financing and excluding working capital, is estimated to be approximately $60 million and we expect to fund these expenditures from cash generated from operations and cash on hand.

As previously mentioned, we have an agreement with ENAP to accelerate natural gas exploration and development in the Dorado Riquelme hydrocarbon exploration block in southern Chile. Under the arrangement, we expect to contribute approximately $100 million in capital, including the $50 million we have invested to date, over the next two to three years and will have a 50% participation in the block. The arrangement is subject to approval by the government of Chile which is expected during the first half of 2009.

We operate in a highly competitive commodity industry and believe it is appropriate to maintain a conservative balance sheet and to retain financial flexibility. This is particularly important in the current uncertain economic environment and the current difficult credit markets. Our cash balance at March 31, 2009 was $313 million and we have low leverage, no near term re-financing requirements, and an undrawn $250 million credit facility provided by highly rated financial institutions that expires in mid-2010. We invest our cash only in highly rated instruments that have maturities of three months or less to ensure preservation of capital and appropriate liquidity. Our planned capital maintenance expenditure program directed towards major maintenance, turnarounds and catalyst changes for current operations, is currently estimated to total approximately $90 million for the period to the end of 2011.

We believe we are in a strong financial position and we are committed to maintaining financial strength and flexibility to meet our financial commitments through this period of uncertainty and continue to invest to grow the Company.


The credit ratings for our unsecured notes at March 31, 2009 were as
follows:
--------------------------------------------------------------------
Standard & Poor's Rating Services         BBB-    (stable)
Moody's Investor Services                 Ba1     (stable)
Fitch Ratings                             BBB     (negative)
Credit ratings are not recommendations to purchase, hold or sell
securities and do not comment on market price or suitability for a
particular investor. There is no assurance that any rating will
remain in effect for any given period of time or that any rating
will not be revised or withdrawn entirely by a rating agency in the
future.
--------------------------------------------------------------------

SHORT-TERM OUTLOOK

In the short term there is significant uncertainty caused by the global economic slowdown and its impact on our business. The significant slowdown in the global economy that began in the fourth quarter of 2008 has persisted into 2009 and it is uncertain how long the current weak economic environment will last or how severe it may become. These global economic conditions materially affect both the supply and demand for methanol and the price at which methanol is sold. The degree to which our business is impacted is dependent upon the duration and severity of these economic conditions.

In April 2009, our average non-discounted price across all of the major regions is approximately $210 per tonne. We currently believe that methanol prices should remain relatively stable during the second quarter. However, the methanol price will ultimately depend on industry operating rates, global energy prices, the rate of industry restructuring and the strength of global demand. We believe that our excellent financial position and financial flexibility, outstanding global supply network and low cost position will provide a sound basis for Methanex continuing to be the leader in the methanol industry and investing to grow the Company.

CONTROLS AND PROCEDURES

For the three months ended March 31, 2009, no changes were made in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

CHANGES IN ACCOUNTING POLICIES

On January 1, 2009, we adopted the CICA issued Handbook Section 3064, Goodwill and Intangible Assets. This new accounting standard, replaces Section 3062, Goodwill and Other Intangible Assets. Section 3064 expands on the standards for recognition, measurement and disclosure of intangible assets. The impact of the retroactive adoption of this standard on our consolidated financial statements at January 1, 2009 is approximately $13 million recorded as a reduction to opening retained earnings and property, plant and equipment. The amount relates to certain pre-operating expenditures that have been capitalized to property, plant and equipment at December 31, 2008 that would have been required to be expensed under this new standard. The impact for the three months ended March 31, 2009 was an increase to selling, general and administrative expenses of approximately $1.2 million (2008 - $0.9 million).

TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

In February 2008, the Canadian Accounting Standards Board confirmed January 1, 2011 as the changeover date for Canadian publicly accountable enterprises to start using International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and disclosures.

As a result of the IFRS transition, changes in accounting policies are likely and may materially impact our consolidated financial statements. The IASB will also continue to issue new accounting standards during the conversion period, and as a result, the final impact of IFRS on our consolidated financial statements will only be measured once all the IFRS applicable at the conversion date are known.

We have established a working team to manage the transition to IFRS. Additionally, we have established an IFRS steering committee to monitor progress and review and approve recommendations from the working team for the transition to IFRS. The working team provides regular updates to the IFRS steering committee and to the Audit, Finance & Risk Committee of the Board.

We have developed a plan to convert our consolidated financial statements to IFRS at the changeover date of January 1, 2011 with comparative financial results for 2010. The IFRS transition plan addresses the impact of IFRS on accounting policies and implementation decisions, infrastructure, business activities, and control activities.

We have commenced the accounting policy selection phase and are addressing, on a priority basis, those areas which we believe may cause the most significant impact to our consolidated financial statements. In conjunction with the accounting policy selection phase, we are identifying the impact of IFRS on infrastructure (including financial reporting expertise and information technology and data systems), business activities (including financial covenants and compensation arrangements), and control activities (including internal control over financial reporting and disclosure controls and procedures).

We will continue to provide updates on the status of key activities for this convergence project in our quarterly and annual Management's Discussion and Analysis throughout the convergence period to January 1, 2011.

ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES

In addition to providing measures prepared in accordance with Canadian generally accepted accounting principles (GAAP), we present certain supplemental non-GAAP measures. These are Adjusted EBITDA, operating income and cash flows from operating activities before changes in non-cash working capital. These measures do not have any standardized meaning prescribed by Canadian GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. We believe these measures are useful in evaluating the operating performance and liquidity of the Company's ongoing business. These measures should be considered in addition to, and not as a substitute for, net income, cash flows and other measures of financial performance and liquidity reported in accordance with Canadian GAAP.

Adjusted EBITDA

This supplemental non-GAAP measure is provided to assist readers in determining our ability to generate cash from operations. We believe this measure is useful in assessing performance and highlighting trends on an overall basis. We also believe Adjusted EBITDA is frequently used by securities analysts and investors when comparing our results with those of other companies. Adjusted EBITDA differs from the most comparable GAAP measure, cash flows from operating activities, primarily because it does not include changes in non-cash working capital, other cash payments related to operating activities, stock-based compensation expense, other non-cash items, interest expense, interest and other income, and current income taxes.

The following table shows a reconciliation of cash flows from operating activities to Adjusted EBITDA:


                                                     Three Months Ended
                                            ------------------------------
                                               Mar 31    Dec 31     Mar 31
($ thousands)                                    2009      2008       2008
--------------------------------------------------------------------------

Cash flows from operating activities        $  67,853  $ 49,693  $ 109,132
Add (deduct):
 Changes in non-cash working capital          (63,036)  (84,377)    (8,267)
 Other cash payments                            1,290       545        320
 Stock-based compensation recovery (expense)   (1,874)    1,155     (4,628)
 Other non-cash items                          (2,149)    3,505     (5,859)
 Interest expense                               7,559     8,675     10,690
 Interest and other (income) expense            3,581     1,823        837
 Current income taxes                             (95)    5,697     23,960
--------------------------------------------------------------------------
Adjusted EBITDA                             $  13,129  $(13,284) $ 126,185
--------------------------------------------------------------------------

Operating Income and Cash Flows from Operating Activities before Non-Cash Working Capital

Operating income and cash flows from operating activities before changes in non-cash working capital are reconciled to Canadian GAAP measures in our consolidated statements of income and consolidated statements of cash flows, respectively.

QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of selected financial information for the prior eight quarters is as follows:


                                            Three Months Ended
                            -----------------------------------------------
($ thousands, except per       Mar 31       Dec 31       Sep 30      Jun 30
 share amounts)                  2009         2008         2008        2008
---------------------------------------------------------------------------
Revenue                     $ 254,007    $ 408,384    $ 569,876   $ 600,025
Net income (loss)             (18,406)      (3,949)      70,045      38,059
Basic net income (loss)
 per common share               (0.20)       (0.04)        0.75        0.40
Diluted net income (loss)
 per common share               (0.20)       (0.04)        0.74        0.40
---------------------------------------------------------------------------


                                            Three Months Ended
                            -----------------------------------------------
($ thousands, except per       Mar 31       Dec 31       Sep 30      Jun 30
 share amounts)                  2008         2007         2007        2007
---------------------------------------------------------------------------
Revenue                     $ 735,934    $ 731,057    $ 395,118   $ 466,414
Net income                     64,598      171,697       23,610      35,654
Basic net income per
 common share                    0.66         1.74         0.24        0.35
Diluted net income per
 common share                    0.66         1.72         0.24        0.35
---------------------------------------------------------------------------

NORMAL COURSE ISSUER BID

On May 6, 2008 the Company filed a Notice of Intention to Make a Normal Course Issuer Bid with Toronto Stock Exchange ("TSX") pursuant to which the Company may repurchase up to 7,909,393 common shares of the Company, representing 10% of the public float of the issued and outstanding common shares of the Company as at May 2, 2008. This normal course issuer bid repurchase program, which is carried out through the facilities of the TSX, commenced on May 20, 2008 and will expire on the earlier of May 19, 2009 and the date upon which the Company has acquired the maximum number of common shares permitted under the purchase program or otherwise decided not to make further purchases. For the first quarter of 2009, the Company did not purchase any common shares under this program. The Company has entered into an automatic securities purchase plan with its broker in connection with purchases to be made under this program. Shareholders may obtain a copy of the Notice of Intention without charge by contacting the Corporate Secretary at 604-661-2600.

FORWARD-LOOKING STATEMENTS

This First Quarter 2009 Management's Discussion and Analysis contains forward-looking statements with respect to us and the chemical industry. Statements that include the words "believes", "expects", "may", "will," "should", "seeks", "intends", "plans", "estimates", "anticipates", or the negative version of those words or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements.

However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including the on-time and on-budget completion of our new methanol joint venture project in Egypt, the ability to successfully carry out corporate initiatives and strategies, conditions in the methanol and other industries, fluctuations in supply, demand and price for methanol and its derivatives, including demand for methanol for energy uses, the price of oil, the success of natural gas exploration and development activities in southern Chile and New Zealand and our ability to obtain any additional gas in those regions on commercially acceptable terms, actions of competitors and suppliers, actions of governments and governmental authorities, changes in laws or regulations, world-wide economic conditions and other risks described in our 2008 Management's Discussion and Analysis and this First Quarter 2009 Management's Discussion and Analysis. In addition to the foregoing risk factors, the current global financial crisis and its impact on global economies has added additional risks and uncertainties including changes in capital markets and corresponding effects on the company's investments, our ability to access existing or future credit and defaults by customers, suppliers or insurers.

Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one's own due diligence and judgment. The outcomes anticipated in forward-looking statements may not occur and we do not undertake to update forward-looking statements.

HOW WE ANALYZE OUR BUSINESS

Our operations consist of a single operating segment - the production and sale of methanol. We review our results of operations by analyzing changes in the components of our Adjusted EBITDA (refer to Supplemental Non-GAAP Measures for a reconciliation to the most comparable GAAP measure), depreciation and amortization, interest expense, interest and other income, and income taxes. In addition to the methanol that we produce at our facilities, we also purchase and re-sell methanol produced by others and we sell methanol on a commission basis. We analyze the results of all methanol sales together. The key drivers of changes in our Adjusted EBITDA for methanol sales are average realized price, sales volume and cash costs. The price, cash cost and volume variances included in our Adjusted EBITDA analysis are defined and calculated as follows:

PRICE

The change in Adjusted EBITDA as a result of changes in average realized price is calculated as the difference from period to period in the selling price of methanol multiplied by the current period total methanol sales volume excluding commission sales volume plus the difference from period to period in commission revenue.

COST

The change in our Adjusted EBITDA as a result of changes in cash costs is calculated as the difference from period to period in cash costs per tonne multiplied by total methanol sales volume excluding commission sales volume in the current period plus the change in unabsorbed fixed cash costs, the change in consolidated selling, general and administrative expenses and the change in fixed storage and handling costs.

VOLUME

The change in Adjusted EBITDA as a result of changes in sales volumes is calculated as the difference from period to period in total methanol sales volume excluding commission sales volume multiplied by the margin per tonne for the prior period. The margin per tonne is calculated as the selling price per tonne of methanol less absorbed fixed cash costs per tonne and variable cash costs per tonne.


Methanex Corporation
Consolidated Statements of Income (Loss) (unaudited)
(thousands of U.S. dollars, except number of common shares and per
 share amounts)

                                                     Three Months Ended
                                               --------------------------
                                                     Mar 31        Mar 31
                                                       2009          2008
-------------------------------------------------------------------------
                                                             (As adjusted -
                                                                   note 2)
Revenue                                        $    254,007  $    735,934

Cost of sales and operating expenses                240,878       609,749
Depreciation and amortization                        28,921        23,113
-------------------------------------------------------------------------
Operating income (loss) before undernoted items     (15,792)      103,072
Interest expense (note 7)                            (7,559)      (10,690)
Interest and other income (expense)                  (3,581)         (837)
-------------------------------------------------------------------------
Income (loss) before income taxes                   (26,932)       91,545
Income tax recovery (expense):
 Current                                                 95       (23,960)
 Future                                               8,431        (2,987)
-------------------------------------------------------------------------
                                                      8,526       (26,947)
-------------------------------------------------------------------------
Net income (loss)                              $    (18,406) $     64,598
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net income (loss) per common share:
 Basic                                         $      (0.20) $       0.66
 Diluted                                       $      (0.20) $       0.66

Weighted average number of common
 shares outstanding:
 Basic                                           92,034,025    97,155,124
 Diluted                                         92,034,025    97,534,095

Number of common shares outstanding
 at period end                                   92,039,492    95,588,767

See accompanying notes to consolidated financial statements.


Methanex Corporation
Consolidated Balance Sheets (unaudited)
(thousands of U.S. dollars)

                                                     Mar 31        Dec 31
                                                       2009          2008
-------------------------------------------------------------------------
                                                             (As adjusted -
                                                                   note 2)
ASSETS
Current assets:
 Cash and cash equivalents                      $   312,894 $     328,430
 Receivables                                        150,754       213,419
 Inventories                                        126,783       177,637
 Prepaid expenses                                    20,466        16,840
-------------------------------------------------------------------------
                                                    610,897       736,326
Property, plant and equipment (note 4)            1,978,665     1,899,059
Other assets                                        169,463       168,988
-------------------------------------------------------------------------
                                                $ 2,759,025 $   2,804,373
-------------------------------------------------------------------------
-------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued liabilities       $   174,784 $     235,369
 Current maturities on long-term debt (note 6)       15,282        15,282
 Current maturities on other
  long-term liabilities                               6,916         8,048
-------------------------------------------------------------------------
                                                    196,982       258,699
Long-term debt (note 6)                             817,021       772,021
Other long-term liabilities                          90,541        97,441
Future income tax liabilities                       290,761       299,192
Non-controlling interest                            104,592        88,604
Shareholders' equity:
 Capital stock                                      427,345       427,265
 Contributed surplus                                 24,862        22,669
 Retained earnings                                  829,834       862,507
 Accumulated other comprehensive loss               (22,913)      (24,025)
-------------------------------------------------------------------------
                                                  1,259,128     1,288,416
-------------------------------------------------------------------------
                                                $ 2,759,025 $   2,804,373
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.


Methanex Corporation
Consolidated Statements of Shareholders' Equity (unaudited)
(thousands of U.S. dollars, except number of common shares)

                                                        Accumu-
                                                         lated
                                                         Other       Total
             Number of              Contri-             Compre-      Share-
                Common   Capital     buted   Retained  hensive     holders'
                Shares     Stock   Surplus   Earnings     Loss      Equity
----------------------  --------------------------------------  ----------
Balance,
 December
 31,
 2007   



 as
 previously
 reported   98,310,254  $ 451,640 $ 16,021  $ 876,348 $ (8,655) $1,335,354
 Adjustments
  for
  retroactive
  adoption
  of new
  accounting
  policies:
 Goodwill and
  intangibles
  3064 (note 2)      -         -         -     (7,790)       -      (7,790)
 Non-controlling
  interest
  proportionate
  share
  (note 2)           -         -         -      1,858    3,462       5,320
----------------------  --------------------------------------  ----------
Balance,
 December
 31,
 2007
 as
 adjusted   98,310,254   451,640    16,021    870,416   (5,193)  1,332,884
 Net income
  and other
  comprehensive
  loss, as
  previously
  reported           -         -         -    172,298  (31,363)    140,935
 Adjustments
  for retroactive
  adoption of new
  accounting
  policies:
 Goodwill and
  intangibles
  3064 (note 2)      -         -         -     (5,818)       -      (5,818)
 Non-controlling
  interest
  proportionate
  share (note 2)     -         -         -      2,273   12,531      14,804
                                            --------- --------   ---------
 Net income
  and other
  comprehensive
  loss, as
  adjusted                                    168,753  (18,832)    149,921
 Compensation
  expense
  recorded
  for stock
  options            -         -     8,225          -        -       8,225
 Issue of
  shares on
  exercise
  of stock
  options      224,016     4,075         -          -        -       4,075
 Reclassifi-
  cation
  of grant
  date fair
  value on
  exercise
  of stock
  options            -     1,577    (1,577)         -        -           -
 Payments
  for shares
  repurch-
  ased      (6,502,878)  (30,027)        -   (119,829)       -    (149,856)
Dividend
  payments           -         -         -    (56,833)       -     (56,833)
----------------------  --------------------------------------  ----------
Balance,
 December
 31,
 2008       92,031,392   427,265    22,669    862,507  (24,025)  1,288,416
 Net loss            -         -         -    (18,406)       -     (18,406)
 Compensation
  expense
  recorded
  for stock
  options            -         -     2,235          -        -       2,235
 Issue of
  shares on
  exercise
  of stock
  options        8,100        38         -          -        -          38
 Reclassifi-
  cation
  of grant
  date fair
  value on
  exercise
  of stock
  options            -        42       (42)         -        -           -
 Dividend
  payments           -         -         -    (14,267)       -     (14,267)
 Other
  comprehensive
  income             -         -         -          -    1,112       1,112
----------------------  --------------------------------------  ----------
Balance,
 March 31,
 2009       92,039,492 $ 427,345 $  24,862  $ 829,834 $(22,913) $1,259,128
----------------------  --------------------------------------  ----------
----------------------  --------------------------------------  ----------

See accompanying notes to consolidated financial statements.


Consolidated Statements of Comprehensive Income (Loss) (unaudited)
(thousands of U.S. dollars)

                                                     Three months ended
                                               ---------------------------
                                                    Mar 31          Mar 31
                                                      2009            2008
--------------------------------------------------------------------------
Net income (loss)                              $   (18,406)   $     64,598
 Other comprehensive income (loss), net of tax:
  Change in fair value of forward exchange
   contracts (note 12)                                  42            (265)
  Change in fair value of interest rate
   swap contracts (note 12)                          1,070          (7,138)
--------------------------------------------------------------------------
                                                     1,112          (7,403)
--------------------------------------------------------------------------
Comprehensive income (loss)                    $   (17,294)   $     57,195
--------------------------------------------------------------------------
--------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.


Methanex Corporation
Consolidated Statements of Cash Flows (unaudited)
(thousands of U.S. dollars)

                                                    Three Months Ended
                                               --------------------------
                                                     Mar 31        Mar 31
                                                       2009          2008
-------------------------------------------------------------------------
                                                             (As adjusted -
                                                                   note 2)
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income (loss)                             $    (18,406) $     64,598
 Add (deduct) non-cash items:
  Depreciation and amortization                      28,921        23,113
  Future income taxes                                (8,431)        2,987
  Stock-based compensation expense                    1,874         4,628
  Other                                               2,149         5,859
 Other cash payments, including
  stock-based compensation                           (1,290)         (320)
-------------------------------------------------------------------------
 Cash flows from operating activities
  before undernoted                                   4,817       100,865
 Changes in non-cash working capital (note 11)       63,036         8,267
-------------------------------------------------------------------------
                                                     67,853       109,132
-------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Payments for shares repurchased                          -       (74,076)
 Dividend payments                                  (14,267)      (13,464)
 Proceeds from limited recourse debt (note 6)        45,000        39,000
 Equity contribution by non-controlling interest     16,060        13,600
 Repayment of limited recourse debt                    (313)         (312)
 Proceeds on issue of shares on exercise
  of stock options                                       38         2,392
 Repayment of other long-term liabilities            (7,641)       (4,998)
-------------------------------------------------------------------------
                                                     38,877       (37,858)
-------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Property, plant and equipment                      (16,899)       (8,151)
 Egypt plant under construction                     (86,352)      (94,757)
 Dorado Riquelme investment (note 13)                (8,089)            -
 GeoPark financing                                        -       (11,390)
 Changes in reserve accounts                          7,600             -
 Other assets                                        (2,411)          306
 Changes in non-cash working capital (note 11)      (16,115)       19,658
-------------------------------------------------------------------------
                                                   (122,266)      (94,334)
-------------------------------------------------------------------------
 Decrease in cash and cash equivalents              (15,536)      (23,060)
 Cash and cash equivalents, beginning of period     328,430       488,224
-------------------------------------------------------------------------
 Cash and cash equivalents, end of period      $    312,894  $    465,164
-------------------------------------------------------------------------
-------------------------------------------------------------------------

SUPPLEMENTARY CASH FLOW INFORMATION
 Interest paid                                 $     20,358  $     16,989
 Income taxes paid, net of amounts refunded    $      5,765  $     28,148

See accompanying notes to consolidated financial statements.

Methanex Corporation

Notes to Consolidated Financial Statements (unaudited)

Except where otherwise noted, tabular dollar amounts are stated in thousands of U.S. dollars.

1. Basis of presentation:

These interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in Canada on a basis consistent with those followed in the most recent annual consolidated financial statements, except as described in Note 2 below. These accounting principles are different in some respects from those generally accepted in the United States and the significant differences are described and reconciled in Note 14. These interim consolidated financial statements do not include all note disclosures required by Canadian generally accepted accounting principles for annual financial statements, and therefore should be read in conjunction with the annual consolidated financial statements included in the Methanex Corporation 2008 Annual Report. Certain prior period comparatives have been reclassified to conform with the current year presentation.

2. Changes to Canadian generally accepted accounting principles and reclassifications:

On January 1, 2009, the Company adopted the CICA issued Handbook Section 3064, Goodwill and Intangible Assets. This new accounting standard, replaces Section 3062, Goodwill and Other Intangible Assets. Section 3064 expands on the standards for recognition, measurement and disclosure of intangible assets. The impact of the retroactive adoption of this standard on the Company's consolidated balance sheet at January 1, 2009 is approximately $13 million recorded as a reduction to opening retained earnings and property plant and equipment. The amount relates to certain pre-operating expenditures that have been capitalized to property, plant and equipment at December 31, 2008 that would have been required to be expensed under this new standard. The impact for the three months ended March 31, 2009 was an increase to selling, general and administrative expenses of approximately $1.2 million (2008 - $0.9 million).

As a portion of these pre-operating expenditures were incurred in a non-wholly-owned subsidiary, the Company has also adjusted the opening non-controlling interest (NCI) and retained earnings balances at December 31, 2008 for the NCI's proportionate share of approximately $4 million. In addition, the Company has retrospectively reclassified approximately $16 million from accumulated other comprehensive loss to NCI, representing the NCI's share of accumulated other comprehensive loss to December 31, 2008.

3. Inventories:

Inventories are valued at the lower of cost, determined on a first-in first-out basis, and estimated net realizable value. The amount of inventories included in cost of sales and operating expense and depreciation and amortization during the three months ended March 31, 2009 was $231 million (2008 - $573 million).

4. Property, plant and equipment:


                                                  Accumulated     Net Book
                                           Cost  Depreciation        Value
------------------------------------------------------------- ------------

March 31, 2009
 Plant and equipment                $ 2,557,059  $  1,316,928  $ 1,240,131
 Egypt plant under construction         676,937             -      676,937
 Other                                  128,033        66,436       61,597
------------------------------------------------------------- ------------
                                    $ 3,362,029  $  1,383,364  $ 1,978,665
------------------------------------------------------------- ------------
December 31, 2008
 Plant and equipment                $ 2,544,163  $  1,299,296  $ 1,244,867
 Egypt plant under construction         590,585             -      590,585
 Other                                  127,731        64,124       63,607
------------------------------------------------------------- ------------
                                    $ 3,262,479  $  1,363,420  $ 1,899,059
------------------------------------------------------------- ------------

5. Interest in Atlas joint venture:

The Company has a 63.1% joint venture interest in Atlas Methanol Company (Atlas). Atlas owns a 1.7 million tonne per year methanol production facility in Trinidad. Included in the consolidated financial statements are the following amounts representing the Company's proportionate interest in Atlas:


                                                          Mar 31     Dec 31
Consolidated Balance Sheets                                 2009       2008
---------------------------------------------------------------------------
Cash and cash equivalents                             $   52,138 $   35,749
Other current assets                                      52,105     57,374
Property, plant and equipment                            253,869    249,609
Other assets                                              10,549     18,149
Accounts payable and accrued liabilities                  27,757     19,927
Long-term debt, including current maturities (note 6)    106,750    106,592
Future income tax liabilities                             15,288     17,942
---------------------------------------------------------------------------

                                                         Three Months Ended
                                                      ---------------------
                                                          Mar 31     Mar 31
Consolidated Statements of Income                           2009       2008
---------------------------------------------------------------------------
Revenue                                               $   37,861 $   82,077
Expenses                                                 (34,675)    74,634
---------------------------------------------------------------------------
Income before income taxes                                 3,186      7,443
Income tax expense                                          (742)    (1,902)
---------------------------------------------------------------------------
Net income                                            $    2,444 $    5,541
---------------------------------------------------------------------------

                                                         Three Months Ended
                                                      ---------------------
                                                          Mar 31     Mar 31
Consolidated Statements of Cash Flows                       2009       2008
---------------------------------------------------------------------------
Cash inflows from operating activities                $   17,322 $   24,554
Cash outflows from investing activities                     (933)      (166)
---------------------------------------------------------------------------

6. Long-term debt:


                                                          Mar 31     Dec 31
                                                            2009       2008
---------------------------------------------------------------------------
Unsecured notes
 8.75% due August 15, 2012                            $  198,290 $  198,182
 6.00% due August 15, 2015                               148,564    148,518
---------------------------------------------------------------------------
                                                         346,854    346,700
Atlas limited recourse debt facilities                   106,750    106,592
Egypt limited recourse debt facilities                   365,574    320,574
Other limited recourse debt facilities                    13,125     13,437
---------------------------------------------------------------------------
                                                         832,303    787,303
Less current maturities                                  (15,282)   (15,282)
---------------------------------------------------------------------------
                                                      $  817,021 $  772,021
---------------------------------------------------------------------------

7. Interest expense:


                                                         Three Months Ended
                                                      ---------------------
                                                          Mar 31     Mar 31
                                                            2009       2008
---------------------------------------------------------------------------
Interest expense before capitalized interest          $   15,049 $   13,855
Less: capitalized interest related to Egypt project       (7,490)    (3,165)
---------------------------------------------------------------------------
Interest expense                                      $    7,559 $   10,690
---------------------------------------------------------------------------

In 2007, the Company reached financial close and secured limited recourse debt of $530 million for its joint venture project to construct a 1.3 million tonne per year methanol facility in Egypt. For the three months ended March 31, 2009, interest costs related to this project of $7.5 million were capitalized (2008 - $3.2 million).

8. Net income (loss) per common share:

A reconciliation of the weighted average number of common shares outstanding is as follows:


                                                         Three Months Ended
                                                      ---------------------
                                                          Mar 31     Mar 31
                                                            2009       2008
---------------------------------------------------------------------------
Denominator for basic net income
 (loss) per common share                              92,034,025 97,155,124
Effect of dilutive stock options                               -    378,971
---------------------------------------------------------------------------
Denominator for diluted net income
 (loss) per common share                              92,034,025 97,534,095
---------------------------------------------------------------------------

9. Stock-based compensation:

a) Stock options:

(i) Incentive stock options:

Common shares reserved for outstanding incentive stock options at March 31, 2009:


                                     Options                  Options
                               Denominated in CAD       Denominated in USD
                             ---------------------    ---------------------
                                          Weighted                 Weighted
                            Number of      Average    Number of     Average
                                Stock     Exercise        Stock    Exercise
                              Options        Price      Options       Price
--------------------------------------------------    ---------------------
Outstanding at
 December 31, 2008             76,450    $    6.95    3,743,117   $   23.27
 Granted                            -            -    1,361,130        6.33
 Exercised                     (8,100)        5.85            -           -
 Cancelled                     (1,000)        5.85       (5,325)      25.27
---------------------------------------------------------------------------
Outstanding at
 March 31, 2009                67,350    $    7.09    5,098,922   $   18.75
---------------------------------------------------------------------------

Information regarding the incentive stock options outstanding at March 31, 2009 is as follows:


                                Options                      Options
                              Outstanding at              Exercisable at
                              March 31, 2009              March 31, 2009
                    ---------------------------------- --------------------
                       Weighted
                        Average
                      Remaining    Number of  Weighted   Number of Weighted
                    Contractual        Stock   Average       Stock  Average
Range of                   Life      Options  Exercise     Options Exercise
Exercise Prices          (Years) Outstanding     Price Exercisable    Price
------------------------------------------------------ --------------------

Options denominated
 in CAD
 $3.29 to 9.56              1.5       67,350  $   7.09      67,350 $   7.09
---------------------------------------------------------------------------

Options denominated
 in USD
 $6.33 to 11.56             6.5    1,548,680  $   6.60     187,550 $   8.57
 $17.85 to 22.52            3.7    1,466,150     20.26   1,459,483    20.25
 $23.92 to 28.43            5.4    2,084,092     26.71   1,023,657    26.14
---------------------------------------------------------------------------
                            5.3    5,098,922  $  18.75   2,670,690 $  21.69
---------------------------------------------------------------------------

(ii) Performance stock options:

As at March 31, 2009, there were 35,000 shares (December 31, 2008 - 35,000 shares) reserved for performance stock options with an exercise price of CAD $4.47. All outstanding performance stock options have vested and are exercisable.

(iii) Compensation expense related to stock options:

For the three months ended March 31, 2009, compensation expense related to stock options included in cost of sales and operating expenses was $2.2 million (2008 - $2.9 million). For the three months ended March 31, 2009, the fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


                                                                       2009
---------------------------------------------------------------------------
Risk-free interest rate                                                1.8%
Dividend yield                                                           2%
Expected life                                                       5 years
Volatility                                                              44%
Forfeiture rate                                                          5%
Weighted average fair value of options granted (USD per share)   $     2.06
---------------------------------------------------------------------------

b) Deferred, restricted and performance share units:

Deferred, restricted and performance share units outstanding at March 31, 2009 are as follows:


                                      Number of     Number of    Number of
                                       Deferred    Restricted  Performance
                                    Share Units   Share Units  Share Units
----------------------------------------------- ------------- ------------

Outstanding at
 December 31, 2008                      411,395        12,523    1,057,648
 Granted                                112,131        15,200      396,470
 Granted in-lieu of dividends            10,187           606       22,913
 Redeemed                                     -             -     (395,420)
 Cancelled                                    -             -      (11,039)
--------------------------------------------------------------------------
Outstanding at March 31, 2009           533,713        28,329    1,070,572
--------------------------------------------------------------------------

Compensation expense for deferred, restricted and performance share units is initially measured at fair value based on the market value of the Company's common shares and is recognized over the related service period. Changes in fair value are recognized in earnings for the proportion of the service that has been rendered at each reporting date. The fair value of deferred, restricted and performance share units at March 31, 2009 was $16.7 million compared with the recorded liability of $14.7 million. The difference between the fair value and the recorded liability of $2.0 million will be recognized over the weighted average remaining service period of approximately 2.1 years.

For the three months ended March 31, 2009, compensation expense related to deferred, restricted and performance share units included was a net recovery of $0.4 million (2008 - expense of $1.7 million), recorded in cost of sales and operating expenses, after a recovery of $3.0 million (2008 - recovery of $1.7 million), related to the effect of the change in the Company's share price.

10. Retirement plans:

Total net pension expense for the Company's defined benefit and defined contribution pension plans during the three months ended March 31, 2009 was $3.5 million (2008 - $2.9 million).

11. Changes in non-cash working capital:

The change in cash flows related to changes in non-cash working capital for the three months ended March 31, 2009 were as follows:


                                                         Three Months Ended
                                                      ---------------------
                                                          Mar 31     Mar 31
                                                            2009       2008
---------------------------------------------------------------------------
Decrease (increase) in non-cash working capital:
 Receivables                                          $   62,665 $  102,331
 Inventories                                              50,854    (36,189)
 Prepaid expenses                                         (3,626)   (16,617)
 Accounts payable and accrued liabilities                (60,585)   (27,383)
---------------------------------------------------------------------------
                                                          49,308     22,142
Adjustments for items not having a cash effect            (2,387)     5,783
---------------------------------------------------------------------------
Changes in non-cash working capital
 having a cash effect                                 $   46,921 $   27,925
---------------------------------------------------------------------------

These changes relate to the following activities:
 Operating                                            $   63,036 $    8,267
 Investing                                               (16,115)    19,658
---------------------------------------------------------------------------
Changes in non-cash working capital                   $   46,921 $   27,925
---------------------------------------------------------------------------

12. Financial instruments:

The following table provides the carrying value of each category of financial assets and liabilities and the related balance sheet item:


                                                          Mar 31     Dec 31
                                                            2009       2008
---------------------------------------------------------------------------
Financial assets:
 Held for trading financial assets:
  Cash and cash equivalents                           $  312,894 $  328,430
  Reserve accounts included in other assets               10,549     18,149

 Loans and receivables:
  Receivables (excluding current portion of
   GeoPark financing)                                    144,772    207,419
  Dorado Riquelme investment included in
   other assets (note 13)                                 50,311     42,123
  GeoPark financing, including current portion            34,726     36,616
---------------------------------------------------------------------------
                                                      $  553,252 $  632,737
---------------------------------------------------------------------------
Financial liabilities:
 Other financial liabilities:
  Accounts payable and accrued liabilities            $  174,784 $  235,369
  Long-term debt, including current portion              832,303    787,303
  Capital lease obligation included in other
   long-term liabilities, including current portion       19,606     20,742

 Held for trading financial liabilities:
  Derivative instruments designated as
   cash flow hedges                                       34,979     38,100
  Derivative instruments                                     637      1,771
---------------------------------------------------------------------------
                                                      $1,062,309 $1,083,285
---------------------------------------------------------------------------

At March 31, 2009, all of the Company's financial instruments are recorded on the balance sheet at amortized cost with the exception of cash and cash equivalents, derivative financial instruments and reserve accounts included in other assets which are recorded at fair value.

The Egypt limited recourse debt facilities bear interest at LIBOR plus a spread. The Company has entered into interest rate swap contracts to swap the LIBOR-based interest payments for an average aggregated fixed rate of 4.8% plus a spread on approximately 75% of the Egypt limited recourse debt facilities for the period September 28, 2007 to March 31, 2015.

These interest rate swaps had outstanding notional amounts of $316 million as at March 31, 2009. Under the interest rate swap contracts the maximum notional amount during the term is $368 million. The notional amount increases over the period of expected draw-downs on the Egypt limited recourse debt and decreases over the expected repayment period. At March 31, 2009, these interest rate swap contracts had a negative fair value of $35.0 million (December 31, 2008 - negative $38.1 million) recorded in other long-term liabilities. The fair value of these interest rate swap contracts will fluctuate until maturity. The Company also designates as cash flow hedges forward exchange contracts to sell euro at a fixed USD exchange rate. At March 31, 2009, the Company had outstanding forward exchange contracts designated as cash flow hedges to sell a notional amount of 12.7 million euro in exchange for US dollars and these euro contracts had a positive fair value of $0.2 million (December 31, 2008 - fair value of nil). Changes in fair value of derivative financial instruments designated as cash flow hedges have been recorded in other comprehensive income.

At March 31, 2009, the Company's derivative financial instruments that have not been designated as cash flow hedges include a floating-for-fixed interest rate swap contract with a negative fair value of $0.6 million (December 31, 2008 - $0.6 million) recorded in other long-term liabilities. For the three months ended March 31, 2009, the total change in fair value of these derivative financial instruments was nil (2008 - negative $0.3 million).

13. Dorado Riquelme investment:

On May 5, 2008, the Company signed an agreement with Empresa Nacional del Petroleo (ENAP), the Chilean state-owned oil and gas company to accelerate gas exploration and development in the Dorado Riquelme exploration block and supply new Chilean-sourced natural gas to the Company's production facilities in Chile. Under the arrangement, the Company expects to contribute approximately $100 million in capital over the next two or three years and will have a 50% participation in the block. As of March 31, 2009, the Company had contributed $50.3 million (December 31, 2008 - $42.1 million) of the total expected capital of $100 million for the Dorado Riquelme block and this amount has been recorded in other assets. The arrangement is subject to approval by the government of Chile and $33.6 million (December 31, 2008 - $33.5 million) of the amount contributed has been placed in escrow until final approval is received. Additionally, the Company invested $16.7 million (December 31, 2008 - $8.6 million) related to developmental and exploratory wells in the Dorado Riquelme block, which has been recorded in other assets.

14. United States generally accepted accounting principles:

The Company follows generally accepted accounting principles in Canada ("Canadian GAAP") which are different in some respects from those applicable in the United States and from practices prescribed by the United States Securities and Exchange Commission ("U.S. GAAP").

The significant differences between Canadian GAAP and U.S. GAAP with respect to the Company's consolidated statements of income (loss) for the three months ended March 31, 2009 and 2008 are as follows:


                                                        Three Months Ended
                                                     ----------------------
                                                         Mar 31      Mar 31
                                                           2009        2008
---------------------------------------------------------------------------
Net income (loss) in accordance with Canadian GAAP   $  (18,406) $   64,598
Add (deduct) adjustments for:
 Depreciation and amortization (a)                         (478)       (478)
 Stock-based compensation (b)                                55          13
 Uncertainty in income taxes (c)                           (414)       (415)
 Income tax effect of above adjustments (d)                 168         168
---------------------------------------------------------------------------
Net income (loss) in accordance with U.S. GAAP       $  (19,075) $   63,886
---------------------------------------------------------------------------

Per share information in accordance with U.S. GAAP:
 Basic net income (loss) per share                   $    (0.21) $     0.66
 Diluted net income (loss) per share                 $    (0.21) $     0.66
---------------------------------------------------------------------------

The significant differences between Canadian GAAP and U.S. GAAP with respect to the Company's consolidated statements of comprehensive income (loss) for the three months ended March 31, 2009 and 2008 are as follows:


                                     Three Months Ended
                   -------------------------------------------------------
                                Mar 31, 2009                  Mar 31, 2008
                   ---------------------------------------    ------------
                   Canadian GAAP   Adjustments   U.S. GAAP       U.S. GAAP
----------------------------------------------------------    ------------
Net income (loss)     $  (18,406)   $     (669) $  (19,075)     $   63,886

Change in fair
 value of forward
 exchange contracts,
 net of tax                   42             -          42            (265)
Change in fair
 value of interest
 rate swap, net of
 tax                       1,070             -       1,070          (7,138)
Change related to
 pension, net of
 tax (e)                       -           354         354             241
----------------------------------------------------------    ------------
Comprehensive
 income (loss)       $   (17,294)   $     (315) $  (17,609)     $   56,724
----------------------------------------------------------    ------------

a) Business combination:

Effective January 1, 1993, the Company combined its business with a methanol business located in New Zealand and Chile. Under Canadian GAAP, the business combination was accounted for using the pooling-of-interest method. Under U.S. GAAP, the business combination would have been accounted for as a purchase with the Company identified as the acquirer. In accordance with U.S. GAAP, an increase to depreciation expense by $0.5 million (2008 - $0.5 million) was recorded for the three months ended March 31, 2009.

b) Stock-based compensation:

The Company has 22,350 stock options that are accounted for as variable plan options under U.S. GAAP because the exercise price of the stock options is denominated in a currency other than the Company's functional currency or the currency in which the optionee is normally compensated. For Canadian GAAP purposes, no compensation expense has been recorded as these options were granted in 2001 which is prior to the effective implementation date for fair value accounting under Canadian GAAP.

c) Accounting for uncertainty in income taxes:

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for income taxes recognized in a Company's financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes (SFAS 109). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with FIN 48, an income tax expense of $0.4 million (2008 - $0.4 million) was recorded for the three months ended March 31, 2009.

d) Income tax accounting:

The income tax differences include the income tax effect of the adjustments related to accounting differences between Canadian and U.S. GAAP. In accordance with U.S. GAAP, an increase to net income of $0.2 million (2008 - $0.2 million) was recorded for the three months ended March 31, 2009.

e) Defined benefit pension plans:

Effective January 1, 2006, U.S. GAAP requires the Company to measure the funded status of a defined benefit pension plan at its balance sheet reporting date and recognize the unrecorded overfunded or underfunded status as an asset or liability with the change in that unrecorded funded status recorded to other comprehensive income. Under U.S. GAAP, all deferred pension amounts from Canadian GAAP are reclassified to accumulated other comprehensive income. In accordance with U.S. GAAP, an increase to other comprehensive income of $0.4 million (2008 - $0.2 million) was recorded for the three months ended March 31, 2009.

f) Interest in Atlas joint venture:

U.S. GAAP requires interests in joint ventures to be accounted for using the equity method. Canadian GAAP requires proportionate consolidation of interests in joint ventures. The Company has not made an adjustment in this reconciliation for this difference in accounting principles because the impact of applying the equity method of accounting does not result in any change to net income or shareholders' equity. This departure from U.S. GAAP is acceptable for foreign private issuers under the practices prescribed by the United States Securities and Exchange Commission.

g) Non-controlling Interests:

Effective January 1, 2009, the FASB issued FAS No. 160, Non-controlling Interests in Consolidated Financial Statements-an amendment of ARB No. 51. FAS No. 160 requires the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labelled, and presented in the consolidated statement of financial position within equity, but separate from the parent's equity. Under this standard, the Company would be required to reclassify non-controlling interest on the consolidated balance sheet into shareholders' equity.


Methanex Corporation
Quarterly History (unaudited)

             Q1
           2009  2008    Q4    Q3    Q2    Q1  2007    Q4    Q3    Q2    Q1
---------------------------------------------------------------------------

METHANOL
 SALES
 VOLUMES
(thousands
 of tonnes)

Company
 produced 1,000 3,363   829   946   910   678 4,569   997 1,073 1,360 1,139
Purchased
 methanol   270 2,074   435   429   541   669 1,453   421   387   269   376
Commission
 sales (1)  131   617   134   172   168   143   590   195   168    89   138
---------------------------------------------------------------------------
          1,401 6,054 1,398 1,547 1,619 1,490 6,612 1,613 1,628 1,718 1,653
---------------------------------------------------------------------------

METHANOL
 PRODUCTION
(thousands
 of tonnes)

Chile       228 1,088   272   246   261   309 1,841   288   233   569   751
Titan,
 Trinidad   223   871   225   200   229   217   861   220   191   225   225
Atlas,
 Trinidad
 (63.1%)    204 1,134   269   284   288   293   982   278   290   234   180
New Zealand 194   570   200   126   124   120   435    75   122   120   118
---------------------------------------------------------------------------
            849 3,663   966   856   902   939 4,119   861   836 1,148 1,274
---------------------------------------------------------------------------

AVERAGE
 REALIZED
 METHANOL
 PRICE (2)
($/tonne)   199   424   321   413   412   545   375   514   270   286   444
($/gallon) 0.60  1.28  0.97  1.24  1.24  1.64  1.13  1.55  0.81  0.86  1.34

PER SHARE
 INFORMATION
 ($ per share)
Basic net
 income
 (loss)  $(0.20) 1.79 (0.04) 0.75  0.40  0.66  3.69  1.74  0.24  0.35  1.38
Diluted
 net income
 (loss)  $(0.20) 1.78 (0.04) 0.74  0.40  0.66  3.68  1.72  0.24  0.35  1.37

1  Commission sales represent volumes marketed on a commission basis.
   Commission income is included in revenue when earned.

2  Average realized price is calculated as revenue, net of commissions


   earned, divided by the total sales volumes of produced and purchased
   methanol.


FOR FURTHER INFORMATION PLEASE CONTACT:

Jason Chesko
Director, Investor Relations
Methanex Corporation
604 661 2600 or Toll Free: 1 800 661 8851

www.methanex.com


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