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Methanex Corporation (MX)
Market: CDN Consolidated
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Dec 19, 2014, 7:41 PM EST
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VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 28, 2005) - Methanex Corporation (TSX:MX)(NASDAQ:MEOH) recorded net income of US$76.0 million (US$0.63 diluted net income per share) and generated EBITDA(1) of US$134.7 million for the first quarter ended March 31, 2005. This compares to net income of US$46.8 million (US$0.38 diluted net income per share) and EBITDA of US$93.4 million for the same period in 2004. In the fourth quarter of 2004, the Company reported net income of US$66.1 million (US$0.54 diluted net income per share) and EBITDA of US $120.8 million.

Bruce Aitken, President and CEO of Methanex commented, "We are delighted to have produced a record quarter. The earnings and cash flows that we achieved in the first quarter are our highest in 10 years. Methanol pricing remained strong and stable in the first quarter, underpinned by tight methanol industry supply and demand fundamentals in an environment of high global energy prices. This resulted in a continuation of the very favourable business environment that Methanex enjoyed in 2004. Our average realized price for the first quarter of 2005 was US$262 per tonne compared with US$251 per tonne for the previous quarter and US$223 per tonne for the first quarter 2004. As we enter the second quarter of 2005, the methanol market remains tight, global inventories remain below normal levels and global Methanex reference prices are stable, ranging from US$302 to $316 (US$0.91 - $0.95 gallon) before discounts."

Mr. Aitken continued, "Our fourth plant in Chile is currently in the commissioning phase and is progressing well. This plant will increase our total low cost production capability to 5.8 million tonnes per year and significantly improve our ability to generate cash throughout the methanol price cycle. We plan to be shipping methanol to our customers from the 840,000 tonne per year Chile IV plant in the second quarter."

Mr. Aitken added, "Numerous planned and unplanned outages in the industry to date in 2005 resulted in global inventories remaining below historic norms. Looking ahead, we remain optimistic that tight market conditions and above average methanol pricing will continue in 2005. We believe that the impact of planned methanol capacity additions this year should be largely offset by further industry restructuring and increased demand."

Mr. Aitken concluded, "We continue to enjoy excellent financial strength and flexibility. With US$257 million cash on hand at the end of the first quarter of 2005 and a US$250 million undrawn credit facility, we have the financial capacity to complete our capital maintenance spending program, pursue new opportunities to enhance our strategic position in the methanol industry and continue to deliver on our commitment to maintain a prudent balance sheet and return excess cash to shareholders."

A conference call is scheduled for Thursday, April 28 at 11:00 am EDT (8:00 am PDT) 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) 883-0139, or toll free at (888) 458-1598. The security passcode for the call is 75577. A playback version of the conference call will be available for seven days at (877) 653-0545. The reservation number for the playback version is 261996. There will be a simultaneous audio-only webcast of the conference call, which can be accessed from our website at www.methanex.com.

Methanex is a Vancouver based, publicly-traded company engaged in the worldwide production and marketing of methanol. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "MX" and on the Nasdaq National Market in the United States under the trading symbol "MEOH."

(1) For a definition of EBITDA, please refer to "Additional Information - Supplemental Non-GAAP Measure" included in this Interim Report.

Information in this news release and the attached management's discussion and analysis may contain forward-looking statements. By their nature, such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. They include world-wide economic conditions, actions of competitors, the availability and cost of gas feedstock, the ability to implement business strategies and pursue business opportunities, conditions in the methanol and other industries including the supply and demand for methanol and the risks attendant with producing and marketing methanol, integrating acquisitions and realizing anticipated synergies and carrying out major capital expenditure projects. Please also refer to our publicly available documents filed from time to time with securities commissions.

Interim Report

For the three months ended March 31, 2005

At April 26, 2005 the Company had 118,503,092 common shares issued and outstanding and stock options exercisable for 1,196,400 additional common shares.

Share Information

Methanex Corporation's common shares are listed for trading on the Toronto Stock Exchange under the symbol MX and on the Nasdaq National Market under the symbol MEOH.


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 web site 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 2005 Management's Discussion and Analysis should be read in conjunction with the 2004 Annual Consolidated Financial Statements and the Management's Discussion and Analysis included in the Methanex 2004 Annual Report. The Methanex 2004 Annual Report and additional information relating to Methanex is available on SEDAR at www.sedar.com.


                                           THREE MONTHS ENDED
                                    --------------------------------
                                    MAR 31       DEC 31       MAR 31
($ millions, except where noted)      2005         2004         2004
--------------------------------------------------------------------
Sales volumes (thousands of tonnes)
 Company produced:                   1,375        1,531        1,227
  Chile and Trinidad                 1,127        1,073          954
  Kitimat and New Zealand              248          458          273
--------------------------------------------------------------------
                                     1,375        1,531        1,227
 Purchased                             296          402          535
 Commission sales(1)                   145          128            -
--------------------------------------------------------------------
                                     1,816        2,061        1,762

Average realized methanol
 price ($ per tonne)(2)                262          251          223
Methanex average
 non-discounted posted price
 ($ per tonne)(3)                      310          289          250
Operating income                     114.7         98.9         73.3
Net income                            76.0         66.1         46.8
Cash flows from operating
 activities(4)                       116.0        103.5         80.6
EBITDA(5)                            134.7        120.8         93.4
Basic net income per common share     0.63         0.55         0.39
Diluted net income per common share   0.63         0.54         0.38
Number of common shares
 outstanding, end of period
 (millions of shares)                119.5        120.0        122.1
Weighted average number of
 common shares outstanding
 (millions of shares)                120.0        120.4        121.2
Diluted weighted average
 number of common shares
 outstanding (millions of shares)    121.3        122.0        123.5
--------------------------------------------------------------------

1. Commission sales volumes represent volumes marketed on a
   commission basis.  Commissions earned are included in revenue.
2. Average realized methanol price is calculated as revenue, net of
   commissions earned, divided by the total sales volumes of
   produced and purchased methanol. Prior to 2005, in-market
   distribution costs were also deducted from revenue when
   calculating average realized methanol price for presentation in
   the Management's Discussion and Analysis. The presentation of
   average realized methanol price for prior periods has been
   restated.
3. Represents the average of the non-discounted contract prices that
   we publish in North America, Europe and Asia Pacific weighted by
   sales volume.
4. Before changes in non-cash working capital.
5. 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 and cash flows related to
   interest expense, interest and other income and income taxes. For
   a reconciliation of cash flows from operating activities to
   EBITDA, refer to "Additional Information - Supplemental Non-GAAP
   Measure."

CONTINUED STRONG FINANCIAL RESULTS

Tight market conditions, high methanol prices and excellent operating performance at our plants resulted in another quarter of strong financial results for Methanex. For the first quarter of 2005 we recorded EBITDA of $134.7 million and net income of $76.0 million (diluted net income per share of $0.63). This compares with EBITDA of $120.8 million and net income of $66.1 million (diluted net income per share of $0.54) for the fourth quarter of 2004 and EBITDA of $93.4 million and net income of $46.8 million (diluted net income per share of $0.38) for the first quarter of 2004.

EBITDA

Commencing with this first quarter 2005 Management's Discussion and Analysis, we are providing separate discussion of the change in EBITDA related to our Kitimat and New Zealand facilities. Accordingly, the price, cash cost and volume variances described below represent the change in EBITDA excluding the change related to sales of Kitimat and New Zealand produced methanol. The change in cash margin earned by our Kitimat and New Zealand facilities is presented separately. Natural gas is the primary feedstock at our methanol production facilities. Our low cost Chile and Trinidad production hubs are underpinned by long-term low cost take-or-pay natural gas purchase contracts with pricing terms that vary with methanol prices. This relationship enables these facilities to be competitive throughout the methanol price cycle and, accordingly, changes in methanol prices, sales volumes and cash costs for methanol produced at these facilities are the key drivers of changes in our EBITDA. In comparison, our facilities in Kitimat and New Zealand incur higher production costs and their operating results represent a smaller proportion of our EBITDA. We have positioned our New Zealand and Kitimat operations to be flexible and will continue to critically assess our operating plan with consideration given to prevailing market conditions and our ability to generate positive cash margins.

The change in EBITDA for the first quarter of 2005 compared with the fourth quarter of 2004 and the first quarter of 2004 resulted from the following:


                              Q1-2005 COMPARED   Q1-2005 COMPARED
($ millions)                      WITH Q4-2004       WITH Q1-2004
-----------------------------------------------------------------
Increase (decrease) related
 to changes in:
Average realized methanol price             10                 42
Total cash cost                              6                 (7)
Sales volumes                                7                 16
Margin earned from Kitimat
 and New Zealand facilities                (10)                (8)
Margin on the sale of
 purchased methanol                          1                 (2)
-----------------------------------------------------------------
                                            14                 41
-----------------------------------------------------------------

Average realized methanol price

Strong demand and tight supply have resulted in the continuation of a strong methanol price environment during the first quarter of 2005. This favourable price environment continues to be underpinned by high North American natural gas prices and high global energy prices. Our first quarter of 2005 average realized price(1) was $262 per tonne compared with $251 per tonne for the fourth quarter of 2004 and $223 per tonne for the first quarter of 2004. The impact on EBITDA of changes in the average realized price for produced methanol is included in the above table.

The methanol industry is highly competitive and prices are affected by supply and demand fundamentals. We publish non-discounted prices for each major methanol market and offer discounts to customers based on various factors. For the first quarter of 2005 our average realized methanol price is approximately 15% lower than our average non-discounted price. This compares to approximately 13% lower for the fourth quarter of 2004 and 11% lower for the first quarter of 2004. In order to reduce the impact of cyclical pricing on our earnings, for a portion of our production volume we have positioned ourselves with certain global customers under long-term contracts where prices are either fixed or linked to our costs plus a margin. While the discount from reference prices in the current strong pricing environment has increased, the discount should narrow during periods of lower pricing. We believe it is important to maintain financial flexibility throughout the methanol price cycle and these strategic contracts are a component of our prudent approach to liquidity.

(1) Average realized methanol price is calculated as revenue, net of commissions earned, divided by the total sales volumes of produced and purchased methanol. Prior to 2005, in-market distribution costs were also deducted from revenue when calculating average realized methanol price for presentation in the Management's Discussion and Analysis. The presentation of average realized methanol price for prior periods has been restated.

Total cash cost

Maintaining a low cost structure provides a competitive advantage in a commodity industry and is a key element of our strategy. Our low cost production facilities in Chile and Trinidad represent over 80% of our total production capacity. These facilities are underpinned by long-term low cost take-or-pay natural gas purchase agreements with pricing terms that are linked to methanol prices above a pre-determined floor price. We believe this enables these facilities to be competitive throughout the methanol price cycle.

Our total cash costs for the first quarter of 2005 were lower than in the fourth quarter of 2004 and this increased EBITDA by $6 million. The decrease in cash costs primarily relates to lower costs for maintenance, supply chain and general and administrative expenditures, including lower stock-based compensation expense of $2 million.

Our total cash costs for the first quarter of 2005 were higher than in the first quarter of 2004 and this decreased EBITDA by $7 million. The increase in cash costs primarily relates to the impact of higher methanol prices on natural gas costs at our Chile and Trinidad facilities.

Sales volumes

Higher sales volumes of methanol produced from our low-cost Chile and Trinidad facilities during the first quarter of 2005 increased EBITDA by $7 million compared with the fourth quarter of 2004 and increased EBITDA by $16 million compared with the first quarter of 2004. Sales volumes of methanol produced from these facilities represented 82% of our total produced product sales volumes for the first quarter of 2005 compared with 70% in the fourth quarter of 2004 and 78% in the first quarter of 2004.

Margin earned from our Kitimat and New Zealand facilities

The cash margin earned from our Kitimat and New Zealand facilities during the first quarter of 2005 was $10 million lower than in the fourth quarter of 2004 and $8 million lower than in the first quarter of 2004. These facilities are generating positive cash margins in the current methanol price environment despite high costs for natural gas. The decrease in cash margin compared with the fourth quarter of 2004 primarily relates to reduced sales volumes of production from New Zealand due to natural gas supply constraints. The decrease in cash margin compared with the first quarter of 2004 is primarily due to lower sales volumes of New Zealand production, higher cash costs in New Zealand and higher natural gas costs for our Kitimat facility. Our costs in New Zealand were lower in the first quarter of 2004 primarily as a result of favourable New Zealand dollar foreign currency forward contracts that expired during 2004.

Margin on the sale of purchased methanol

We purchase additional methanol produced by others on the spot market or through offtake agreements in order to meet customer needs and support our marketing efforts. Consequently, we realize holding gains or losses on the resale of this product depending on the methanol price at the time of resale. The cost for purchased methanol also includes allocated fixed storage and handling costs of approximately $5 per tonne. For the first quarter of 2005 we incurred a loss of $5 million on the sale of 0.3 million tonnes of purchased methanol compared with a loss of $6 million on the sale of 0.4 million tonnes for the fourth quarter of 2004 and a loss of $3 million for the first quarter of 2004 on the sale of 0.5 million tonnes.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense was $20 million for the first quarter of 2005 compared with $20 million for the same period in 2004.


INTEREST EXPENSE

The components of interest expense are as follows:

                                            THREE MONTHS ENDED
                                     -------------------------------
Interest expense ($ millions)        MAR 31 2005         MAR 31 2004
--------------------------------------------------------------------

Interest expense before
 interest capitalized for
 plant and equipment under
 construction                               $ 13                $ 15
Less capitalized interest:
 Chile IV                                     (4)                 (3)
 Atlas                                         -                  (4)
--------------------------------------------------------------------
Interest expense                            $  9                $  8
--------------------------------------------------------------------

INTEREST AND OTHER INCOME

Interest and other income for the first quarter of 2005 was $1 million compared with $4 million for the first quarter of 2004. The decrease in interest and other income relates primarily to decreased foreign exchange gains in 2005 compared with 2004.

INCOME TAXES

The effective income tax rate for the first quarter of 2005 was 29% compared with 33% for the first quarter of 2004. The statutory tax rate in Chile and Trinidad, where we earn substantially all of our pre-tax earnings, is 35%. Our 850,000 tonne per year Titan facility in Trinidad has a tax holiday until July 2005. The Atlas facility in Trinidad has an agreement whereby the tax rate will increase over a ten year period from 0% to 35%.


PRODUCTION SUMMARY

(thousands                   Q1-2005             Q4-2004     Q1-2004
 of tonnes)          CAPACITY(1)  PRODUCTION  PRODUCTION  PRODUCTION
--------------------------------------------------------------------
Chile and Trinidad:
 Chile I, II and III        740          727         690         696
 Titan                      210          202         154         190
 Atlas (63.1% interest)     265          235         264           -
--------------------------------------------------------------------
                          1,215        1,164       1,108         886
Other:
 New Zealand(2)             131          120         266         289
 Kitimat                    123          119         122         122
--------------------------------------------------------------------
                            254          239         388         411
--------------------------------------------------------------------
                          1,469        1,403       1,496       1,297
--------------------------------------------------------------------

1. Quarterly operating capacity represents the capacity for plants
   that operated during Q1 2005 calculated for the number of days in
   the period.
2. Quarterly operating capacity for New Zealand includes only the
   Waitara Valley facility for Q1 2005.

Our facilities operated at 96% of operating capacity during the first quarter of 2005. Production from our low cost facilities in Chile and Trinidad was higher during the first quarter of 2005 than in prior periods, representing 83% of our total production compared with 74% for the fourth quarter of 2004 and 68% for the first quarter of 2004.

We have restructured our New Zealand operations over the past two years due to natural gas supply constraints and have reduced our operations to the 530,000 tonne per year Waitara Valley plant. We have positioned the New Zealand operations to be flexible and will continue to critically assess our operating plan during 2005 with consideration given to prevailing market conditions and our ability to generate positive cash margins. Until the end of 2005, we are obligated to supply ammonia under an off take agreement with the former owner of the ammonia production assets located adjacent to our Kitimat methanol facility. From the end of 2005, we have operating flexibility for the Kitimat facility.

SUPPLY/DEMAND FUNDAMENTALS

We continue to operate in an environment of strong demand, high methanol prices and favourable industry fundamentals. A number of unplanned outages contributed to the continuation of tight market conditions and high methanol prices during the first quarter of 2005. Our 840,000 tonne per year Chile IV facility, which is currently being commissioned, will be the next significant increment of industry supply and we plan to begin shipping methanol to our customers during the second quarter. The next large scale methanol plant expected to be completed in 2005 is the 1.8 million tonne MHTL plant in Trinidad. We believe that the impact of these supply additions in 2005 will be largely offset by increased demand and further shutdowns of higher cost methanol facilities. In North America alone, approximately 3.4 million tonnes of capacity continues to operate and we believe it is likely that 1.1 million tonnes of this capacity will shut down with the start-up of MHTL's plant in Trinidad.

In addition to these large-scale capacity additions there are a number of smaller-scale plants in China expected to be completed during 2005. We continue to believe that Chinese methanol capacity additions should not significantly impact the global supply/demand balance due to increased demand for methanol in China and difficulties associated with exporting methanol from China. These difficulties include product quality and plant reliability issues as well as a high cost structure.


METHANEX NON DISCOUNTED REGIONAL POSTED CONTRACT PRICES
                             APR    JAN
US$ per tonne               2005   2005
---------------------------------------
United States               $316   $316
Europe(i)                   $304   $309
Asia                        $302   $302

(i) The European contract transaction price is EUR 230 at January
    and April 2005 and is presented in the above table in United
    States dollars converted at the date of settlement.

The Methanex non-discounted reference prices for April 2005 are $316 per tonne ($0.95 per gallon) in the United States and $302 per tonne in Asia. In Europe, the April 2005 contract transaction price was held at EUR 230 (US$304 per tonne at the time of settlement compared with US$309 at January 2005). Currently, spot prices in the United States are approximately $293 per tonne ($0.88 per gallon) and spot prices in Europe (FOB Rotterdam) are approximately EUR 210 per tonne. Prices in Asia are currently between $280 and $290 per tonne.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities before changes in non-cash working capital in the first quarter of 2005 were $116 million compared with $81 million for the same period in 2004. The improvement in cash flows from operating activities is primarily the result of higher levels of earnings.

During the first quarter of 2005, we repurchased for cancellation 1.3 million shares at an average price of US$18.54 per share under a normal course issuer bid that expires May 16, 2005. At March 31, 2005, we have repurchased a total of 7.5 million common shares under this bid with a maximum allowable repurchase of 12.2 million common shares. Also during the first quarter, we paid a quarterly dividend of US$0.08 per share, or approximately $10 million.

Capital expenditures for Chile IV during the first quarter of 2005 were $12 million and remaining costs to complete the construction of Chile IV at March 31, 2005 are estimated to be $40 million.

We have excellent financial capacity and flexibility. Our cash balance at March 31, 2005 was $257 million and we have an undrawn $250 million credit facility. The planned capital maintenance expenditure program directed towards major maintenance, turnarounds and catalyst changes is estimated to total approximately $75 million for the period to the end of 2007. We have $250 million of public bonds due August 2005 and are currently reviewing our refinancing options.


The credit ratings for our unsecured notes at March 31, 2005 were as
follows:

----------------------------------------------------------------
Standard & Poor's Rating Services                   BBB- (stable)
Moody's Investor Services                           Ba1  (stable)
Fitch Ratings                                       BBB  (stable)

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.
----------------------------------------------------------------

We have the financial capacity to complete Chile IV and our capital maintenance spending program, pursue new opportunities to enhance our strategic position in the methanol industry and continue to deliver on our commitment to maintain a prudent balance sheet and return excess cash to shareholders.

SHORT-TERM OUTLOOK

We are currently operating in an environment of strong demand, tight supply conditions and high methanol prices. Global inventory levels are low and we believe that several turnarounds are scheduled for the second quarter that will limit the rebuilding of global inventories. We expect that the impact of planned new capacity additions during 2005 is likely to be largely offset by further shutdowns of higher cost methanol production and increased demand. The methanol price will ultimately depend on industry operating rates, 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 ensure that Methanex continues to be the leader in the methanol industry.

ADDITIONAL INFORMATION

SUPPLEMENTAL NON-GAAP MEASURE

In addition to providing measures prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), Methanex presents a supplemental non-GAAP measure, EBITDA. This supplemental non-GAAP measure does not have a standardized meaning prescribed by GAAP and therefore is unlikely to be comparable to similar measures presented by other companies. Management believes this measure is useful in assessing performance and highlighting trends on an overall basis. Management also believes EBITDA is frequently used by securities analysts and investors when comparing our results with those of other companies. 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 and cash flows related to interest expense, interest and other income and income taxes. This measure should be considered in addition to, and not as a substitute for, net income, cash flows from operating activities and other measures of financial performance and liquidity reported in accordance with GAAP.


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

                                           THREE MONTHS ENDED
                                  -----------------------------------
                                    MAR 31        DEC 31      MAR 31
($ thousands)                         2005          2004        2004
--------------------------------------------------------------------
Cash flows from operating
 activities                      $  93,821     $ 114,463    $ 54,354
 Add (deduct):
  Changes in non-cash working
   capital                          22,215       (10,928)     26,292
  Other non-cash operating
   expenses                         (4,500)       (4,638)     (1,634)
  Interest expense                   9,061         9,297       7,829
  Interest and other income         (1,262)       (2,127)     (3,990)
  Income taxes - current            15,365        14,702      10,500
--------------------------------------------------------------------
EBITDA                           $ 134,700     $ 120,769    $ 93,351
--------------------------------------------------------------------


QUARTERLY FINANCIAL DATA (unaudited)

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

                                        THREE MONTHS ENDED
                             ---------------------------------------
($ thousands, except         MAR 31     DEC 31     SEP 30     JUN 30
 per share amounts)            2005       2004       2004       2004
--------------------------------------------------------------------

Revenue                   $ 438,300  $ 485,408  $ 428,840  $ 412,283
Net income                   76,032     66,061     71,178     52,375
Basic net income per
 common share                  0.63       0.55       0.59       0.43
Diluted net income per
 common share                  0.63       0.54       0.58       0.42
--------------------------------------------------------------------


                                        THREE MONTHS ENDED
                             ---------------------------------------
($ thousands, except         MAR 31     DEC 31     SEP 30     JUN 30
 per share amounts)            2004       2003       2003       2003
--------------------------------------------------------------------

Revenue                   $ 392,953  $ 358,421  $ 340,180  $ 377,603
Net income (loss)            46,830   (111,696)    (9,253)    48,415
Basic net income (loss)
 per common share              0.39      (0.93)     (0.08)      0.38
Diluted net income (loss)
 per common share              0.38      (0.93)     (0.08)      0.37
--------------------------------------------------------------------

Our quarterly revenues are not materially impacted by seasonality.

FORWARD-LOOKING STATEMENTS

Statements made in this document that are based on our current expectations, estimates and projections constitute forward-looking statements. Forward-looking statements are based on our experience and perception of trends, current conditions, expected future developments and other factors. By their nature, forward-looking statements involve uncertainties and risks that may cause the stated outcome to differ materially from the actual outcome.

Important factors that can cause anticipated outcomes to differ materially from actual outcomes include worldwide economic conditions; conditions in the methanol and other industries, including the supply and demand balance for methanol; actions of competitors; changes in laws or regulations; the ability to implement business strategies, pursue business opportunities and maintain and enhance our competitive advantages; the risks attendant with methanol production and marketing, including operational disruption; the risks associated with carrying out capital expenditure projects, including completing the Chile IV project on time and on budget; availability and price of natural gas feedstock; foreign exchange risk; raw material and other production costs; transportation costs; the ability to attract and retain qualified personnel; the risks associated with investments and operations in multiple jurisdictions and other risks that we may describe in publicly available documents filed from time to time with securities commissions.

Having in mind these and other factors, many of which are described in this document, readers are cautioned not to place undue reliance on forward-looking statements. We do not guarantee that anticipated outcomes made in forward-looking statements will be realized.


METHANEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(thousands of U.S. dollars, except number of shares
 and per share amounts)

                                                THREE MONTHS ENDED
                                          -------------------------
                                               MAR 31        MAR 31
                                                 2005          2004
-------------------------------------------------------------------

Revenue                                   $   438,300   $   392,953
Cost of sales and operating expenses          303,600       299,602
Depreciation and amortization                  19,953        20,064
-------------------------------------------------------------------
Operating income before undernoted items      114,747        73,287
Interest expense (note 7)                      (9,061)       (7,829)
Interest and other income                       1,262         3,990
-------------------------------------------------------------------
Income before income taxes                    106,948        69,448
Income taxes:
 Current                                      (15,365)      (10,500)
 Future                                       (15,551)      (12,118)
-------------------------------------------------------------------
                                              (30,916)      (22,618)
-------------------------------------------------------------------
Net income                                $    76,032   $    46,830
-------------------------------------------------------------------

Net income per common share:
 Basic                                    $      0.63   $      0.39
 Diluted                                  $      0.63   $      0.38

Weighted average number of common
 shares outstanding:
  Basic                                   119,963,717   121,170,437
  Diluted                                 121,289,236   123,501,408

Period end number of common
 shares outstanding                       119,461,292   122,096,242


METHANEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(thousands of U.S. dollars)

                                               MAR 31        DEC 31
                                                 2005          2004
-------------------------------------------------------------------
                                           (unaudited)
ASSETS

Current assets:
 Cash and cash equivalents                $   257,414   $   210,049
 Receivables                                  259,617       293,207
 Inventories                                  150,327       142,164
 Prepaid expenses                              11,187        16,480
-------------------------------------------------------------------
                                              678,545       661,900
Property, plant and equipment (note 2)      1,368,845     1,366,787
Other assets                                   93,890        96,194
-------------------------------------------------------------------
                                          $ 2,141,280   $ 2,124,881
-------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable and accrued
  liabilities                             $   180,370   $   230,758
 Current maturities on long-term debt
  and other long-term liabilities             273,692       268,303
-------------------------------------------------------------------
                                              454,062       499,061
Long-term debt (note 4)                       350,948       350,868
Other long-term liabilities                    57,205        60,170
Future income taxes                           281,089       265,538
Shareholders' equity:
 Capital stock                                524,956       523,255
 Contributed surplus                            2,873         3,454
 Retained earnings                            470,147       422,535
-------------------------------------------------------------------
                                              997,976       949,244
-------------------------------------------------------------------
                                          $ 2,141,280   $ 2,124,881
-------------------------------------------------------------------


METHANEX CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
(thousands of U.S. dollars, except number of common shares)

                                                               TOTAL
                     NUMBER OF           CONTRI-              SHARE-
                        COMMON   CAPITAL   BUTED  RETAINED  HOLDERS'
                        SHARES     STOCK SURPLUS  EARNINGS    EQUITY
--------------------------------------------------------------------

Balance,
 December
 31, 2003          120,007,767  $499,258  $7,234  $279,039  $785,531
Year ended
 December 31, 2004
  Net income                 -         -       -   236,444   236,444
  Compensation expense
   related to stock
   options included
   in net income             -         -   1,738         -     1,738
  Proceeds on issue
   of shares on
   exercise of
   stock options     6,158,250    44,654       -         -    44,654
  Reclassification
   of grant date fair
   value on exercise
   of stock options          -     5,518  (5,518)        -         -
  Payment for shares
   repurchased      (6,143,600)  (26,175)      -   (59,545)  (85,720)
  Dividend payments          -         -       -   (33,403)  (33,403)
--------------------------------------------------------------------
Balance,
 December
 31, 2004          120,022,417   523,255   3,454   422,535   949,244
Three months
 ended March 31, 2005
  Net income                 -         -       -    76,032    76,032
  Compensation expense
   related to stock
   options included
   in net income             -         -     530         -       530
  Proceeds on issue
   of shares on
   exercise of
   stock options       760,375     6,269       -         -     6,269
  Reclassification
   of grant date fair
   value on exercise
   of stock options          -     1,111  (1,111)        -         -
  Payment for shares
   repurchased      (1,321,500)   (5,679)      -   (18,821)  (24,500)
  Dividend payments          -         -       -    (9,599)   (9,599)
--------------------------------------------------------------------
Balance,
 March 31, 2005    119,461,292  $524,956  $2,873  $470,147  $997,976
--------------------------------------------------------------------


METHANEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands of U.S. dollars)

                                                THREE MONTHS ENDED
                                          -------------------------
                                               MAR 31        MAR 31
                                                 2005          2004
-------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                $    76,032   $    46,830
Add:
 Depreciation and amortization                 19,953        20,064
 Future income taxes                           15,551        12,118
 Other                                          4,500         1,634
-------------------------------------------------------------------
Cash flows from operating activities
 before undernoted changes                    116,036        80,646
Receivables                                    33,590       (17,123)
Inventories                                    (7,439)      (19,349)
Prepaid expenses                                5,293         1,180
Accounts payable and accrued liabilities      (53,659)        9,000
-------------------------------------------------------------------
                                               93,821        54,354
-------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of limited recourse long-term debt        -      (182,758)
Release of restricted cash                          -        14,258
Proceeds on issue of limited
 recourse long-term debt                            -         4,260
Proceeds on issue of shares on exercise
 of stock options                               6,269        16,243
Payment for shares repurchased                (24,500)            -
Dividend payments                              (9,599)       (7,323)
Repayment of other long-term liabilities         (932)       (3,913)
-------------------------------------------------------------------
                                              (28,762)     (159,233)
-------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Plant and equipment under construction        (12,192)      (31,331)
Property, plant and equipment                  (8,478)       (3,232)
Accounts payable and accrued liabilities
 related to capital expenditures                3,271           862
Other assets                                     (295)            -
-------------------------------------------------------------------
                                              (17,694)      (33,701)
-------------------------------------------------------------------
Increase (decrease) in cash and
 cash equivalents                              47,365      (138,580)
Cash and cash equivalents,
 beginning of period                          210,049       287,863
-------------------------------------------------------------------
Cash and cash equivalents,
 end of period                            $   257,414   $   149,283
-------------------------------------------------------------------

SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid, net of
 capitalized interest                     $    20,112   $    25,262
Income taxes paid, net of
 amounts refunded                         $     6,739   $     5,205
-------------------------------------------------------------------


METHANEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Except where otherwise noted, tabular dollar amounts are stated in
thousands of United States 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. 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 2004 Annual Report. During 2004, we changed our financial statement presentation to include in-market distribution costs in cost of sales and operating expenses rather than as a reduction to revenue. Prior periods have been restated.


2. PROPERTY, PLANT AND EQUIPMENT:

                                            ACCUMULATED     NET BOOK
                                   COST    DEPRECIATION        VALUE
--------------------------------------------------------------------

March 31, 2005
Plant and equipment         $ 2,427,980     $ 1,320,148  $ 1,107,832
Plant and equipment under
 construction                   234,635               -      234,635
Other                            56,622          30,244       26,378
--------------------------------------------------------------------
                            $ 2,719,237     $ 1,350,392  $ 1,368,845
--------------------------------------------------------------------

December 31, 2004
Plant and equipment         $ 2,422,148     $ 1,302,701  $ 1,119,447
Plant and equipment under
 construction                   222,443               -      222,443
Other                            53,976          29,079       24,897
--------------------------------------------------------------------
                            $ 2,698,567     $ 1,331,780  $ 1,366,787
--------------------------------------------------------------------

3. INTEREST IN ATLAS JOINT VENTURE:

The Company has a 63.1% joint venture interest in Atlas Methanol Company (Atlas). The joint venture has constructed a 1.7 million tonne per year methanol plant in Trinidad that began operations in July 2004.

Included in the consolidated financial statements are the following amounts representing the Company's proportionate interest in the Atlas joint venture:


                                     MAR 31, 2005       DEC 31, 2004
--------------------------------------------------------------------

Consolidated Balance Sheets:
 Cash and cash equivalents             $   23,648          $  13,981
 Other current assets                      28,137             21,677
 Property, plant and equipment            282,744            284,336
 Other assets                              14,771             14,930
 Current liabilities,
  excluding current maturities
  on long-term debt                        22,403             30,112
 Long-term debt, including
  current maturities                      159,012            159,012
--------------------------------------------------------------------
Consolidated Statements of Income:

 Revenue                               $   60,684          $       -
 Expenses                                  34,682                  -
--------------------------------------------------------------------
 Net income                            $   26,002          $       -
--------------------------------------------------------------------

Consolidated Statements of Cash Flows:
 Cash inflows from operating
  activities                           $   15,176          $       -
 Cash inflows from financing
  activities                                    -              4,260
 Cash outflows from investing
  activities                               (1,592)           (22,347)
--------------------------------------------------------------------
--------------------------------------------------------------------

4. LONG-TERM DEBT:
                                     MAR 31, 2005       DEC 31, 2004
--------------------------------------------------------------------

Unsecured notes                        $  449,954          $ 449,920
Atlas limited recourse debt
 facilities                               159,012            159,012
--------------------------------------------------------------------
                                          608,966            608,932
Less current maturities                  (258,018)          (258,064)
--------------------------------------------------------------------
                                       $  350,948          $ 350,868
--------------------------------------------------------------------

The limited recourse debt facilities of Atlas are described as
limited recourse as they are secured only by the assets of the joint
venture.

5. NET INCOME PER COMMON SHARE:

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

                                            THREE MONTHS ENDED
                                     -------------------------------
                                     MAR 31, 2005       MAR 31, 2004
--------------------------------------------------------------------

Denominator for basic net
 income per common share              119,963,717        121,170,437
Effect of dilutive stock options        1,325,519          2,330,971
--------------------------------------------------------------------
Denominator for diluted net
 income per common share              121,289,236        123,501,408
--------------------------------------------------------------------

6. STOCK-BASED COMPENSATION:

(a) Stock options:

i) Incentive stock options:

Common shares reserved for outstanding incentive stock options at
March 31, 2005:

                            OPTIONS DENOMINATED  OPTIONS DENOMINATED
                                        IN CAD$               IN US$
                            ----------------------------------------
                                       WEIGHTED             WEIGHTED
                           NUMBER OF    AVERAGE  NUMBER OF   AVERAGE
                               STOCK   EXERCISE      STOCK  EXERCISE
                             OPTIONS      PRICE    OPTIONS     PRICE
--------------------------------------------------------------------

Outstanding at
 December 31, 2004           784,675    $ 10.82  1,397,000   $  8.36
 Granted                           -          -    652,750     17.73
 Exercised                  (311,550)     12.26   (370,325)     7.81
 Cancelled                   (15,500)     14.63          -         -
--------------------------------------------------------------------
Outstanding at
 March 31, 2005              457,625    $  9.70  1,679,425   $ 12.13
--------------------------------------------------------------------

As at March 31, 2005, 457,625 incentive stock options denominated in
CAD$ and 730,475 incentive stock options denominated in US$ had
vested and were exercisable at average prices of CAD$9.70 and
US$8.11, respectively.

ii) Performance stock options:

Common shares reserved for outstanding performance stock options at
March 31, 2005:
                                        NUMBER OF   AVERAGE EXERCISE
                                    STOCK OPTIONS        PRICE (CAD$)
--------------------------------------------------------------------
Outstanding at December 31, 2004          204,000          $    4.47
Exercised                                 (78,500)              4.47
--------------------------------------------------------------------
Outstanding at March 31, 2005             125,500          $    4.47
--------------------------------------------------------------------

As at March 31, 2005, all outstanding performance stock options have
vested and are exercisable.

iii) Compensation expense related to stock options:

Compensation expense related to stock options included in cost of
sales and operating expenses is $0.5 million for the three month
period ended March 31, 2005 (2004 - $0.7 million). 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:

                                             2005               2004
--------------------------------------------------------------------

Risk-free interest rate                         4%                 3%
Expected dividend yield                         2%                 2%
Expected life                             5 years            5 years
Expected volatility                            43%                35%
--------------------------------------------------------------------

For the three month period ended March 31, 2005, the weighted average
grant date fair value of stock options granted was US$6.59 per share
(2004 - US$3.63 per share).

(b) Deferred and restricted share units:

Deferred and restricted share units outstanding at March 31, 2005 are
as follows:
                                        NUMBER OF          NUMBER OF
                                         DEFERRED         RESTRICTED
                                      SHARE UNITS        SHARE UNITS
--------------------------------------------------------------------

Outstanding at December 31, 2004          455,519          1,014,313
Granted                                    73,912            561,150
Dividend equivalents                        1,876              4,167
Redeemed                                        -             (8,366)
--------------------------------------------------------------------
Outstanding at March 31, 2005             531,307          1,571,264
--------------------------------------------------------------------

The fair value of deferred and restricted share units at March 31,
2005 was $41.2 million compared with an accrued value of $19.2
million. Compensation expense related to deferred and restricted
share units included in cost of sales and operating expenses is $4.0
million for the three month period ended March 31, 2005 (2004 - $2.1
million). Included in compensation expense for the three month period
ended March 31, 2005 is $1.9 million (2004 - $0.1 million), related
to the increase in our share price since the date of grant.

7. INTEREST EXPENSE:

                                            THREE MONTHS ENDED
                                     -------------------------------
                                     MAR 31, 2005       MAR 31, 2004
--------------------------------------------------------------------

Interest expense before
 capitalized interest                  $   13,267          $  14,764
Less capitalized interest                  (4,206)            (6,935)
--------------------------------------------------------------------
                                       $    9,061          $   7,829
--------------------------------------------------------------------

8. RETIREMENT PLANS:

Total net pension expense for the Company's defined benefit and
defined contribution pension plans during the three month period
ended March 31, 2005 was $1.0 million (2004 - $1.6 million).

METHANEX CORPORATION

QUARTERLY HISTORY (unaudited)

                          Q1 2005   2004     Q4     Q3     Q2     Q1
--------------------------------------------------------------------

METHANOL SALES VOLUMES
(thousands of tonnes)
 Company produced           1,375  5,298  1,531  1,307  1,233  1,227
 Purchased product            296  1,960    402    423    600    535
 Commission sales(1)          145    169    128     41      -      -
--------------------------------------------------------------------
                            1,816  7,427  2,061  1,771  1,833  1,762
--------------------------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)
 Chile                        727  2,692    690    640    666    696
 Titan, Trinidad              202    740    154    176    220    190
 Atlas, Trinidad (63.1%)      235    421    264    157      -      -
 New Zealand                  120  1,088    266    304    229    289
 Kitimat                      119    486    122    121    121    122
--------------------------------------------------------------------
                            1,403  5,427  1,496  1,398  1,236  1,297
--------------------------------------------------------------------

METHANOL PRICE(2)
 ($/tonne)                    262    237    251    248    225    223
 ($/gallon)                  0.79   0.71   0.75   0.75   0.68   0.67

PER SHARE INFORMATION
 ($ per share)
  Basic net
   income (loss)           $ 0.63   1.95   0.55   0.59   0.43   0.39
  Diluted net
   income (loss)           $ 0.63   1.92   0.54   0.58   0.42   0.38


                                    2003     Q4     Q3     Q2     Q1
--------------------------------------------------------------------

METHANOL SALES VOLUMES
(thousands of tonnes)
 Company produced                  4,933  1,328  1,200  1,211  1,194
 Purchased product                 1,392    399    350    332    311
 Commission sales(1)                 254      -      -     55    199
--------------------------------------------------------------------
                                   6,579  1,727  1,550  1,598  1,704
--------------------------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)
 Chile                             2,704    640    624    732    708
 Titan, Trinidad                     577    222    202    153      -
 Atlas, Trinidad (63.1%)               -      -      -      -      -
 New Zealand                         968    158    229    225    356
 Kitimat                             449    109     91    122    127
--------------------------------------------------------------------
                                   4,698  1,129  1,146  1,232  1,191
--------------------------------------------------------------------

METHANOL PRICE(2)
 ($/tonne)                           224    208    219    245    227
 ($/gallon)                         0.67   0.63   0.66   0.74   0.68

PER SHARE INFORMATION
 ($ per share)
  Basic net
   income (loss)                  $ 0.01  (0.93) (0.08)  0.38   0.59
  Diluted net
   income (loss)                  $ 0.01  (0.93) (0.08)  0.37   0.57


(1) Commission sales volumes include the 36.9% of production from
    Atlas that we do not own. Commission sales volumes prior to 2004
    represents commission sales of production from Titan Methanol
    Company prior to our acquisition of Titan effective May 1, 2003.

(2) Average realized methanol price is calculated as revenue, net of
    commissions earned, divided by the total sales volumes of
    produced and purchased methanol. Prior to 2005, in-market
    distribution costs were also deducted from revenue when
    calculating average realized methanol price for presentation in
    the Management's Discussion and Analysis. The presentation of
    average realized methanol price for prior periods has been
    restated.


FOR FURTHER INFORMATION PLEASE CONTACT:

Methanex Corporation
Wendy Bach
Director, Investor Relations
(604) 661-2600


www.methanex.com

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