Methanex Reports Stronger EBITDA in the Second Quarter

Methanex Reports Stronger EBITDA in the Second Quarter 
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/24/13 -- For the
second quarter of 2013, Methanex Corporation (TSX:MX)(NASDAQ:MEOH)
reported Adjusted EBITDA(1) of $157 million and Adjusted net
income(1) of $99 million ($1.02 per share on a diluted basis(1)).
This compares with Adjusted EBITDA(1) of $149 million and Adjusted
net income(1) of $88 million ($0.92 per share on a diluted basis(1))
for the first quarter of 2013. 
John Floren, President and CEO of Methanex commented, "The higher
methanol pricing environment in the second quarter contributed to
stronger EBITDA and earnings. Entering the third quarter, we continue
to move forward on a number of growth projects. These projects are
expected to expand our annual operating capacity by approximately
three million tonnes over the next three years, representing a 60%
capacity increase." 
Mr. Floren added, "We are making solid progress on our initiatives in
both New Zealand and Medicine Hat, which will add up to one million
tonnes of annual production capacity by the end of 2013. Our project
to relocate the first one million tonne plant from Chile to Geismar,
Louisiana is on track to be completed by the end of 2014 with the
second one million tonne plant in Geismar expected to be operational
in early 2016." 
Mr. Floren concluded, "This is an exciting time for our business as
these growth projects offer significant upside to our earnings and
cash flows. With over US$700 million of cash on hand, an undrawn
credit facility, a robust balance sheet and strong cash flow
generation, we are well positioned to grow our business and deliver
on our commitment to return excess cash to shareholders." 
A conference call is scheduled for July 25, 2013 at 12:00 noon ET
(9:00 am PT) to review these second quarter results. To access the
call, dial the Conferencing operator ten minutes prior to the start
of the call at (416) 695-6616, or toll free at (800) 766-6630. A
playback version of the conference call will be available until
August 15, 2013 at (905) 694-9451, or toll free at (800) 408-3053.
The passcode for the playback version is 3021008. Presentation slides
summarizing Q2-13 results and a simultaneous audio-only webcast of
the conference call can be accessed from our website at
www.methanex.com. The webcast will be available on the website for
three weeks following the call.  
Methanex is a Vancouver-based, publicly traded company and is the
world's largest supplier of methanol to major international markets.
Methanex shares are listed for trading on the Toronto Stock Exchange
in Canada under the trading symbol "MX" and on the NASDAQ Global
Market in the United States under the trading symbol "MEOH".
Effective July 19, 2013, Methanex shares are no longer listed for
trading on the Santiago Stock Exchange. 
FORWARD-LOOKING INFORMATION WARNING 
This Second Quarter 2013 press release contains forward-looking
statements with respect to us and the chemical industry. Refer to
Forward-Looking Information Warning in the attached Second Quarter
2013 Management's Discussion and Analysis for more information. 


 
(1) Adjusted EBITDA, Adjusted net income and Adjusted net income per common 
share are non-GAAP measures which do not have any standardized meaning      
prescribed by GAAP. These measures represent the amounts that are           
attributable to Methanex Corporation shareholders and are calculated by     
excluding the mark-to-market impact of share-based compensation as a result 
of changes in our share price and items considered by management to be non- 
operational. Refer to Additional Information - Supplemental Non-GAAP        
Measures section of the attached Interim Report for the three months ended  
June 30, 2013 for reconciliations to the most comparable GAAP measures.     

 
Interim Report for the Three Months Ended June 30, 2013 
At July 24, 2013 the Company had 95,360,640 common shares issued and
outstanding and stock options exercisable for 2,996,690 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 Global
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 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                                          

 
SECOND QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS 
Except where otherwise noted, all currency amounts are stated in
United States dollars. 
FINANCIAL AND OPERATIONAL HIGHLIGHTS 


 
--  A reconciliation from net income attributable to Methanex shareholders
    to Adjusted net income(1) and the calculation of Adjusted net income per
    common share(1) is as follows: 
 
                                         Three Months Ended Six Months Ended
                                   -----------------------------------------
($ millions except number of shares  Jun 30  Mar 31  Jun 30   Jun 30  Jun 30
 and per share amounts)                2013    2013    2012     2013    2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to Methanex                                         
 shareholders                       $    54 $    60 $    52  $   114 $    74
  Mark-to-market impact of share-                                           
   based compensation, net of tax         9      28     (10)      36       7
  Geismar project relocation                                                
   expenses, net of tax                  22       -       2       22       2
  Write-off of oil and gas rights,                                          
   net of tax                            14       -       -       14       -
----------------------------------------------------------------------------
Adjusted net income (1)             $    99 $    88 $    44  $   186 $    83
----------------------------------------------------------------------------
Diluted weighted average shares                                             
 outstanding (millions)                  96      96      95       96      95
Adjusted net income per common                                              
 share (1)                          $  1.02 $  0.92 $  0.47  $  1.94 $  0.88
----------------------------------------------------------------------------
 
--  We recorded Adjusted EBITDA(1) of $157 million for the second quarter of
    2013 compared with $149 million for the first quarter of 2013. The
    increase in Adjusted EBITDA(1) was primarily due to an increase in
    average realized p
rice to $425 per tonne for the second quarter of 2013
    from $412 per tonne for the first quarter of 2013. 
    
--  Production for the second quarter of 2013 was 1,035,000 tonnes compared
    with 1,057,000 tonnes for the first quarter of 2013. Refer to the
    Production Summary section. 
    
--  Sales of Methanex-produced methanol were 1,021,000 tonnes in the second
    quarter of 2013 compared with 1,024,000 in the first quarter of 2013. 
    
--  During the second quarter of 2013, we reached a final investment
    decision to proceed with the relocation of a second 1.0 million tonne
    Chile facility to the Geismar site. We expect the 1.0 million tonne
    Geismar II facility will be operational by early 2016. During the second
    quarter of 2013, we recorded a $34 million expense ($22 million after-
    tax) to earnings related to Geismar II project relocation expenses that
    are not eligible for capitalization. The Geismar I facility remains on
    track to be operational by the end of 2014. 
    
--  We continue to make good progress with our projects to expand operating
    capacity in Medicine Hat and New Zealand. We expect our Medicine Hat
    debottlenecking project will add 90,000 tonnes of annual capacity by the
    end of the third quarter of 2013 and that we will be able to operate our
    New Zealand operations at their full annual production capacity of 2.4
    million tonnes by the end of 2013, depending on natural gas composition.
    During the second quarter of 2013 we contracted additional natural gas
    in New Zealand that represents approximately 600,000 tonnes of methanol
    production. 
    
--  During the second quarter of 2013, we recorded a $17 million non-cash
    charge ($14 million after-tax) to earnings to write off oil and gas
    rights in New Zealand. 
    
 
(1) These items are non-GAAP measures that do not have any standardized     
meaning prescribed by GAAP and therefore are unlikely to be comparable to   
similar measures presented by other companies. Refer to the Additional      
Information - Supplemental Non-GAAP Measures section for a description of   
each non-GAAP measure and reconciliations to the most comparable GAAP       
measures.                                                                   

 
This Second Quarter 2013 Management's Discussion and Analysis
("MD&A") dated July 24, 2013 for Methanex Corporation ("the Company")
should be read in conjunction with the Company's condensed
consolidated interim financial statements for the period ended June
30, 2013 as well as the 2012 Annual Consolidated Financial Statements
and MD&A included in the Methanex 2012 Annual Report. Unless
otherwise indicated, the financial information presented in this
interim report is prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The Methanex 2012 Annual Report and
additional information relating to Methanex is available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. 
Effective January 1, 2013, we adopted new IFRS standards related to
consolidation and joint arrangement accounting. Under these new
standards, our 63.1% interest in the Atlas entity, which was
previously proportionately consolidated in our financial statements,
is accounted for using the equity method. This change has been
applied retrospectively. As a result, amounts related to Atlas are no
longer included in individual line items in our consolidated
financial statements and the net assets and net earnings are
presented separately. For purposes of analyzing our consolidated
financial results in this MD&A, the Adjusted EBITDA from our 63.1%
interest in the Atlas entity is included in Adjusted EBITDA. 
FINANCIAL AND OPERATIONAL DATA 


 
                                         Three Months Ended Six Months Ended
                                   -----------------------------------------
  ($ millions, except per share      Jun 30  Mar 31  Jun 30  Jun 30   Jun 30
   amounts and where noted)            2013    2013    2012    2013     2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production (thousands of tonnes)                                            
 (attributable to Methanex                                                  
 shareholders)                        1,035   1,057   1,034   2,092    1,979
                                                                            
Sales volumes (thousands of                                                 
 tonnes):                                                                   
  Methanex-produced methanol                                                
   (attributable to Methanex                                                
   shareholders)                      1,021   1,024   1,001   2,045    1,927
  Purchased methanol                    749     588     569   1,337    1,260
  Commission sales (1)                  242     219     276     461      474
----------------------------------------------------------------------------
  Total sales volumes                 2,012   1,831   1,846   3,843    3,661
                                                                            
Methanex average non-discounted                                             
 posted price ($ per tonne) (2)         494     474     452     484      444
Average realized price ($ per                                               
 tonne) (3)                             425     412     384     418      383
                                                                            
Adjusted EBITDA (attributable to                                            
 Methanex shareholders) (4)             157     149     113     307      206
Adjusted cash flows from operating                                          
 activities (attributable to                                                
 Methanex shareholders) (4)             158     127     110     286      199
Cash flows from operating                                                   
 activities                             125     118     140     243      214
Adjusted net income (attributable                                           
 to Methanex shareholders) (4)           99      88      44     186       83
Net income attributable to Methanex                                         
 shareholders                            54      60      52     114       74
                                                                            
Adjusted net income per common                                              
 share (attributable to Methanex                                            
 shareholders) (4)                     1.02    0.92    0.47    1.94     0.88
Basic net income per common share                                           
 (attributable to Methanex                                                  
 shareholders)                         0.57    0.64    0.56    1.21     0.80
Diluted net income per common share                                         
 (attributable to Methanex                                                  
 shareholders)                         0.56    0.63    0.50    1.19     0.78
                                                                            
Common share information (millions                                          
 of shares):                                                                
  Weighted average number of common                                         
   shares                                95      95      94      95       93
  Diluted weighted average number                                           
   of common shares                      96      96      95      96       95
  Number of common shares                                                   
   outstanding, end of period            95      95      94      95       94
----------------------------------------------------------------------------
                                                                            
(1) Commission sales represent volumes marketed on a commission basis       
related to the 36.9% of the Atlas methanol facility and 40% of the Egypt    
methanol facility that we do not own.                 
                      
                                                                            
(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, excluding commissions  
earned and the Egypt non-controlling interest share of revenue but including
an amount representing our share of Atlas revenue, divided by the total     
sales volumes of Methanex-produced (attributable to Methanex shareholders)  
and purchased methanol.                                                     
                                                                            
(4) These items are non-GAAP measures that do not have any standardized     
meaning prescribed by GAAP and therefore are unlikely to be comparable to   
similar measures presented by other companies. Refer to the Additional      
Information - Supplemental Non-GAAP Measures section for a description of   
each non-GAAP measure and reconciliations to the most comparable GAAP       
measures.                                                                   

 
PRODUCTION SUMMARY 


 
                                                        Q2 2013      Q1 2013
(thousands of tonnes)                  Capacity(1)   Production   Production
----------------------------------------------------------------------------
New Zealand (2)                                608          361          309
Atlas (Trinidad) (63.1% interest)              281          201          248
Titan (Trinidad)                               218          169          181
Egypt (60% interest)                           190          163          133
Medicine Hat (Canada)                          118          129          131
Chile I and IV                                 450           12           55
Geismar I and II (Louisiana, USA) (3)          500            -            -
----------------------------------------------------------------------------
                                             2,365        1,035        1,057
----------------------------------------------------------------------------
 
                                           Q2 2012  YTD Q2 2013  YTD Q2 2012
(thousands of tonnes)                   Production   Production   Production
----------------------------------------------------------------------------
New Zealand (2)                                210          670          384
Atlas (Trinidad) (63.1% interest)              264          449          391
Titan (Trinidad)                               196          350          411
Egypt (60% interest)                           164          296          366
Medicine Hat (Canada)                          118          260          232
Chile I and IV                                  82           67          195
Geismar I and II (Louisiana, USA) (3)            -            -            -
----------------------------------------------------------------------------
                                             1,034        2,092        1,979
----------------------------------------------------------------------------
                                                                            
(1) The production capacity of our facilities may be higher than original   
nameplate capacity as, over time, these figures have been adjusted to       
reflect ongoing operating efficiencies. Actual production for a facility in 
any given year may be higher or lower than annual production capacity due to
a number of factors, including natural gas composition or the age of the    
facility's catalyst.                                                        
                                                                            
(2) The annual production capacity of New Zealand represents the two 0.85   
million tonne facilities at Motunui and the 0.53 million tonne facility at  
Waitara Valley. The current operating capacity of the Motunui facilities is 
1.5 million tonnes due to distillation capacity constraints (refer to New   
Zealand section below).                                                     
                                                                            
(3) We are relocating two idle Chile facilities to Geismar, Louisiana. The  
Geismar I facility is expected to be operational by the end of 2014 and the 
Geismar II facility is expected to be operational in early 2016.            

 
New Zealand 
Our New Zealand methanol facilities produced 361,000 tonnes of
methanol in the second quarter of 2013 compared with 309,000 tonnes
in the first quarter of 2013. During the first quarter of 2013, the
Motunui facilities suffered an equipment failure which resulted in an
unplanned outage and lost production of approximately 60,000 tonnes.
The facility was repaired and the Motunui facilities returned to
operation at the end of March 2013. We are in the process of
restarting the Waitara Valley facility and debottlenecking the
Motunui facilities which we expect will allow us to produce at the
site's full annual production capacity of up to 2.4 million tonnes,
depending on natural gas composition, by the end of 2013. During the
second quarter of 2013, we contracted additional natural gas in New
Zealand that represents approximately 600,000 tonnes of methanol
production. 
Trinidad 
In Trinidad, we own 100% of the Titan facility with an annual
production capacity of 875,000 tonnes and have a 63.1% interest in
the Atlas facility with an annual production capacity of 1,125,000
tonnes (63.1% interest). The Titan facility produced 169,000 tonnes
in the second quarter of 2013 compared with 181,000 tonnes in the
first quarter of 2013 and the Atlas facility produced 201,000 tonnes
in the second quarter of 2013 compared with 248,000 tonnes in the
first quarter of 2013. During the second quarter of 2013, lost
production at the Titan and Atlas facilities as a result of unplanned
outages was approximately 28,000 tonnes and 29,000 tonnes,
respectively. 
We continue to experience some natural gas curtailments to our
Trinidad facilities due to a mismatch between upstream commitments to
supply the Natural Gas Company of Trinidad and Tobago (NGC) and
downstream demand from NGC's customers, which becomes apparent when
an upstream supplier has a technical issue or planned maintenance
that reduces gas delivery. We are engaged with key stakeholders to
find a solution to this issue, but in the meantime expect to continue
to experience gas curtailments to the Trinidad site. 
Egypt 
The Egypt methanol facility produced 163,000 tonnes (60% interest) in
the second quarter of 2013 compared with 133,000 tonnes in the first
quarter of 2013. Production during the second quarter of 2013 and the
first quarter of 2013 was impacted by natural gas supply
restrictions. 
The Egypt facility has experienced periodic natural gas supply
restrictions since mid-2012 which have resulted in production below
full capacity. This situation may persist in the future and become
more acute during the summer months when electricity demand is at its
peak. Refer to our 2012 Annual Report for further details. 
Medicine Hat, Canada 
Our 470,000 tonne per year facility in Medicine Hat, Alberta produced
129,000 tonnes in the second quarter of 2013 compared with 131,000
tonnes during the first quarter of 2013. The Medicine Hat facility is
currently able to produce above stated production capacity due to the
age of its catalyst and the composition of the natural gas feedstock.
We are currently debottlenecking the Medicine Hat facility which we
expect will add a further 90,000 tonnes of annual production capacity
by the end of the third quarter of 2013. 
Chile 
During the second quarter of 2013, we produced 12,000 tonnes in Chile
compared with 55,000 tonnes in the first quarter of 2013. In addition
to our own production, early in the second quarter we continued to
receive some natural gas from Argentina under an arrangement whereby
we process the natural gas received and return the methanol produced
to Argentina. Under this arrangement, our Chile operations produced
an additional 18,000 tonnes during the second quarter of 2013
compared with 6,000 tonnes during the first quarter of 2013.  
As a result of insufficient natural gas feedstock from Chile and
Argentina during the southern hemisphere winter, we idled our Chile
operations at the end of April 2013. We are optimistic that we will
secure sufficient natural gas from Empresa Nacional del Petroleo
(ENAP) and others to restart our operations later in 2013. 
The future of our Chile operations is primarily dependent on the
level of exploration and development in southern Chile and our
ability to secure a sustainable natural gas supply to our facilities
on economic terms from Chile and Argentina. 
Geismar, Louisiana 
We are in the process of relocating the idle Chile II and Chile III
facilities to Geismar, Louisiana (Geismar I and Geismar II). The 1.0
million tonne Geismar I facility is expected to be operational by the
end of 2014 and the 1.0 million tonne Geismar II facility is expected
to be operational in early 2016. During the second quarter of 2013,
we incurred $54 million of capital expenditures related to these
projects. In addition, under IFRS, certain costs associated with
relocating an asset are not eligible for capitalization and are
required to be charged directly to earnings. During the second
quarter of 2013, $34 million ($22 million after-tax) of Geismar II
project relocation expenses were not eligible to be capitalized and
were charged directly to earnings. 
FINANCIAL RESULTS 
For the second quarter of 2013 we recorded Adjusted EBITDA of $157
million and Adjusted net income of $99 million ($1.02 per share on a
diluted basis). This compares with Adjusted EBITDA of $149 million
and Adjusted net income of $88 million ($0.92 per share on a diluted
basis) for the first quarter of 2013.  
For the second quarter of 2013, we reported net income attributable
to Methanex shareholders of $54 million ($0.56 per share on a diluted
basis) compared with net income attributable to Methanex shareholders
for the first quarter of 2013 of $60 million ($0.63 income per share
on a diluted basis).  
Effective January 1, 2013, we adopted new IFRS standards related to
consolidation and joint arrangement accounting. Under these new
standards, our 63.1% interest in the Atlas entity, which was
previously proportionately consolidated in our financial statements,
is accounted for using the equity method. This change has been
applied retrospectively. As a result, amounts related to Atlas are no
longer included in individual line items in our consolidated
financial statements and the net assets and net earnings are
presented separately. For purposes of analyzing our consolidated
financial results in this MD&A, the Adjusted EBITDA from our 63.1%
interest in the Atlas entity is included in Adjusted EBITDA. Our
analysis of depreciation and amortization, finance costs, finance
income and other expenses and income taxes is consistent with the
presentation of our consolidated statements of income and excludes
amounts related to Atlas. 
We calculate Adjusted EBITDA and Adjusted net income by including
amounts related to our equity share of the Atlas (63.1% interest) and
Egypt (60% interest) facilities and by excluding the mark-to-market
impact of share-based compensation as a result of changes in our
share price and items which are considered by management to be
non-operational. Refer to the Additional Information - Supplemental
Non-GAAP Measures section for a further discussion on how we
calculate these measures. 
A reconciliation from net income attributable to Methanex
shareholders to Adjusted net income and the calculation of Adjusted
net income per common share is as follows:  


 
                                         Three Months Ended Six Months Ended
                                   -----------------------------------------
($ millions except number of shares  Jun 30  Mar 31  Jun 30   Jun 30  Jun 30
 and per share amounts)                2013    2013    2012     2013    2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to Methanex                                         
 shareholders                       $    54 $    60 $    52  $   114 $    74
  Mark-to-market impact of share-                                           
   based compensation, net of tax         9      28     (10)      36       7
  Geismar project relocation                                                
   expenses, net of tax                  22       -       2       22       2
  Write-off of oil and gas rights,                                          
   net of tax                            14       -       -       14       -
----------------------------------------------------------------------------
Adjusted net income (1)             $    99 $    88 $    44  $   186 $    83
----------------------------------------------------------------------------
Diluted weighted average shares                                             
 outstanding (millions)                  96      96      95       96      95
Adjusted net income per common                                              
 share (1)                          $  1.02 $  0.92 $  0.47  $  1.94 $  0.88
----------------------------------------------------------------------------
                                                                            
(1) These items are non-GAAP measures that do not have any standardized     
meaning prescribed by GAAP and therefore are unlikely to be comparable to   
similar measures presented by other companies. Refer to the Additional      
Information - Supplemental Non-GAAP Measures section for a description of   
each non-GAAP measure and reconciliations to the most comparable GAAP       
measures.                                                                   

 
We review our financial results by analyzing changes in Adjusted
EBITDA, mark-to-market impact of share-based compensation,
depreciation and amortization, Geismar project relocation expenses,
write-off of oil and gas rights, finance costs, finance income and
other expenses and income taxes. A summary of our consolidated
statements of income is as follows: 


 
                                       Three Months Ended  Six Months Ended 
                               ---------------------------------------------
                                 Jun 30   Mar 31   Jun 30   Jun 30   Jun 30 
($ millions)                       2013     2013     2012     2013     2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated statements of                                                  
 income:                                                                    
  Revenue                       $   733  $   652  $   613  $ 1,385  $ 1,267 
  Cost of sales and operating                                               
   expenses, excluding mark-to-                                             
   market impact of share-based                                             
   compensation                    (571)    (497)    (487)  (1,068)  (1,022)
  Adjusted EBITDA of associate                                              
   (Atlas) (1)                       18        9       12       27        9 
----------------------------------------------------------------------------
                                    180      164      138      344      254 
Comprised of:                                                               
  Adjusted EBITDA (attributable                                             
   to Methanex shareholders)                                                
   (2)                              157      149      113      307      206 
  Attributable to non-                                                      
   controlling interests             23       15       25       37       48 
----------------------------------------------------------------------------
                                    180      164      138      344      254 
  Mark-to-market impact of                                                  
   share-based compensation          (9)     (31)      11      (40)      (7)
  Depreciation and amortization     (29)     (30)     (38)     (59)     (74)
  Geismar project relocation                                                
   expenses                         (34)       -       (4)     (34)      (4)
  Write-off of oil and gas                                                  
   rights                           (17)       -        -      (17)       - 
  Earnings of associate,                                                    
   excluding amount included in                                             
   Adjusted EBITDA (1)              (12)      (8)     (11)     (20)     (15)
  Finance costs                     (15)     (15)     (17)     (30)     (33)
  Finance income and other                                                  
   expenses                           3       (2)       -        1        2 
  Income tax expense                 (1)     (12)     (13)     (13)     (24)
----------------------------------------------------------------------------
  Net income                    $    66  $    66  $    66  $   132  $    99 
----------------------------------------------------------------------------
  Net income attributable to                                                
   Methanex shareholders        $    54  $    60  $    52  $   114  $    74 
----------------------------------------------------------------------------
                                                                            
(1) Earnings of associate has been divided into an amount included in       
Adjusted EBITDA and an amount excluded from Adjusted EBITDA. The amount     
excluded from Adjusted EBITDA represents depreciation and amortization,     
finance costs, finance income and other expenses and income tax expense     
relating to earnings of associate.                                          
                                                                            
(2) This item is a non-GAAP measure that does not have any standardized     
meaning prescribed by GAAP and therefore is unlikely to be comparable to    
similar measures presented by other companies. Refer to the Additional      
Information - Supplemental Non-GAAP Measures section for a description of   
the non-GAAP measure and reconciliation to the most comparable GAAP measure.

 
Adjusted EBITDA (Attributable to Methanex Shareholders) 
Our operations consist of a single operating segment - the production
and sale of methanol. We review the results of operations by
analyzing changes in the components of Adjusted EBITDA. For a
discussion of the definitions used in our Adjusted EBITDA analysis,
refer to the How We Analyze Our Business section. 
The changes in Adjusted EBITDA resulted from changes in the
following:  


 
                                    Q2 2013         Q2 2013     YTD Q2 2013 
                              compared with   compared with   compared with 
($ millions)                        Q1 2013         Q2 2012     YTD Q2 2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average realized price        $          22   $          72   $         121 
Sales volume                             19              21              20 
Total cash costs                        (33)            (49)            (40)
----------------------------------------------------------------------------
Increase in Adjusted EBITDA   $           8   $          44   $         101 
----------------------------------------------------------------------------

 
Average realized price 


 
                                         Three Months Ended Six Months Ended
                                   -----------------------------------------
                                     Jun 30  Mar 31  Jun 30  Jun 30   Jun 30
($ per tonne)                          2013    2013    2012    2013     2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Methanex average non-discounted                                             
 posted price                           494     474     452     484      444
Methanex average realized price         425     412     384     418      383
----------------------------------------------------------------------------

 
Methanol market conditions remained healthy and pricing increased in
North America and Europe during the second quarter of 2013 (refer to
Supply/Demand Fundamentals section for more information). Our average
non-discounted posted price for the second quarter of 2013 was $494
per tonne compared with $474 per tonne for the first quarter of 2013
and $452 per tonne for the second quarter of 2012. Our average
realized price for the second quarter of 2013 was $425 per tonne
compared with $412 per tonne for the first quarter of 2013 and $384
per tonne for the second quarter of 2012. The change in average
realized price for the second quarter of 2013 increased Adjusted
EBITDA by $22 million compared with the first quarter of 2013 and
increased Adjusted EBITDA by $72 million compared with the second
quarter of 2012. Our average realized price for the six months ended
June 30, 2013 was $418 per tonne compared with $383 per tonne for the
same period in 2012 and this increased Adjusted EBITDA by $121
million. 
Sales volume 
Methanol sales volumes excluding commission sales volumes were higher
in the second quarter of 2013 compared with the first quarter of 2013
by 158,000 tonnes and with the second quarter of 2012 by 200,000
tonnes. Higher methanol sales volumes excluding commission sales
volumes for these periods increased Adjusted EBITDA by $19 million
and $21 million, respectively. For the six month period ended June
30, 2013 compared with the same period in 2012, methanol sales
volumes excluding commission sales volumes were higher by 195,000
tonnes and this resulted in higher Adjusted EBITDA by $20 million.  
Total cash costs  
The primary drivers of changes in our total cash costs are changes in
the cost of methanol we produce at our facilities (Methanex-produced
methanol) and changes in the cost of methanol we purchase from others
(purchased methanol). All of our production facilities except
Medicine Hat are underpinned by natural gas purchase agreements with
pricing terms that include base and variable price components. We
supplement our production with methanol produced by others through
methanol offtake contracts and purchases 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 Methanex-produced and purchased
methanol costs primarily depend on changes in methanol pricing and
the timing of inventory flows.  
The impact on Adjusted EBITDA from changes in our cash costs are
explained below:  


 
                                      Q2 2013        Q2 2013    YTD Q2 2013 
                                compared with  compared with  compared with 
($ millions)                          Q1 2013        Q2 2012    YTD Q2 2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Methanex-produced methanol                                                  
 costs                           $         (7)  $        (25)  $        (34)
Proportion of Methanex-produced                                             
 methanol sales                           (19)           (17)             - 
Purchased methanol costs                   (8)           (19)           (37)
Logistics costs                             3              9             20 
Other, net                                 (2)             3             11 
----------------------------------------------------------------------------
                                 $        (33)  $        (49)  $        (40)
----------------------------------------------------------------------------

 
Methanex-produced methanol costs 
We purchase natural gas for the New Zealand, Trinidad, Egypt and
Chile methanol facilities under natural gas purchase agreements where
the unique terms of each contract include a base price and a variable
price component linked to the price of methanol to reduce our
commodity price risk exposure. The variable price component of each
gas contract is adjusted by a formula related to methanol prices
above a certain level. For the second quarter of 2013 compared with
the first quarter of 2013, Methanex-produced methanol costs were
higher by $7 million primarily due to a change in the mix of
production sold from inventory. For the second quarter of 2013 and
six-month period ended June 30, 2013 compared with the same periods
in 2012, Methanex-produced methanol costs were higher by $25 million
and $34 million, respectively, primarily due to the impact of higher
realized methanol prices on our natural gas costs and changes in the
mix of production sold from inventory. 
Proportion of Methanex-produced methanol sales 
The cost of purchased methanol is directly linked to the selling
price for methanol at the time of purchase and the cost of purchased
methanol is generally higher than the cost of Methanex-produced
methanol. Accordingly, an increase in the proportion of
Methanex-produced methanol sales results in a decrease in our overall
cost structure for a given period. For the second quarter of 2013
compared with the first quarter of 2013 and the second quarter of
2012, sales of Methanex-produced methanol made up a lower proportion
of our total sales and this decreased Adjusted EBITDA by $19 million
and $17 million, respectively.  
Purchased methanol costs 
Changes in purchased methanol costs for all periods presented are
primarily as a result of changes in methanol pricing. 
Logistics costs 
Logistics costs vary from period to period depending on the levels of
production from each of our production facilities and the resulting
impact on our supply chain. Over the past year, we have completed
several initiatives that have reduced logistics costs and improved
the efficiency of our supply chain. Logistics costs in the second
quarter of 2013 were $9 million lower than the second quarter of 2012
and logistics costs for the six month period were $20 million lower
than in the same period in 2012. 
Other, net 
We have commenced the process of building a manufacturing
organization in Geismar, Louisiana. Under IFRS, costs incurred
related to organizational build-up are not eligible for
capitalization and are charged directly to earnings as incurred.
During the second quarter of 2013, we incurred approximately $2
million of Geismar organizational build-up costs and expect that a
total of approximately $35 million of these costs will be incurred. 
Mark-to-Market Impact of Share-based Compensation  
We grant share-based awards as an element of compensation.
Share-based awards granted include stock options, share appreciation
rights, tandem share appreciation rights, deferred share units,
restricted share units and performance share units. For all the
share-based awards, share-based compensation is recognized over the
related vesting period for the proportion of the service that has
been rendered at each reporting date. Share-based compensation
includes an amount related to the grant-date value and a
mark-to-market impact as a result of subsequent changes in the
Company's share price. The grant-date value amount is included in
Adjusted EBITDA and Adjusted net income. The mark-to-market impact of
share-based compensation as a result of changes in our share price is
excluded from Adjusted EBITDA and Adjusted net income and analyzed
separately.  


 
                                     Three Months Ended     Six Months Ended
                         ---------------------------------------------------
                             Jun 30    Mar 31    Jun 30     Jun 30    Jun 30
                               2013      2013      2012       2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Methanex Corporation                                                        
 share price (1)          $   42.84 $   40.63 $   27.84  $   42.84 $   27.84
Grant-date fair value                                                       
 expense included in                                                        
 Adjusted EBITDA and                                                        
 Adjusted net income      $       6 $       6 $       7  $      12 $      14
Mark-to-market impact due                                                   
 to change in share price         9        31       (11)        40         7
----------------------------------------------------------------------------
Total share-based                                                           
 compensation expense                                                       
 (recovery)               $      15 $      37 $      (4) $      52 $      21
----------------------------------------------------------------------------
                                                                            
(1) US dollar share price of Methanex Corporation as quoted on NASDAQ Global
Market on the last trading day of the respective period.                    

 
The Methanex Corporation share price increased from $40.63 per share
at March 31, 2013 to $42.84 per share at June 30, 2013. As a result
of the increase in the share price and the resulting impact on the
fair value of the outstanding units, we recorded a $9 million
mark-to-market expense on share-based compensation in the second
quarter of 2013. For the six month period ended June 30, 2013, we
recorded a $40 million mark-to-market share-based compensation
expense as a result of the increase in the share price from $31.87 at
December 31, 2012 to $42.84 at June 30, 2013. For the second quarter
of 2012, a decrease in the share price resulted in an $11 million
mark-to-market recovery. 
Depreciation and Amortization  
Depreciation and amortization was $29 million for the second quarter
of 2013 compared with $30 million for the first quarter of 2013 and
$39 million for the second quarter of 2012. Depreciation and
amortization for the six-month period ended June 30, 2013 was $59
million compared with $74 million for the same period in 2012.
Depreciation and amortization is lower in 2013 compared with 2012
primarily as a result of the lower carrying value of our Chile assets
due to the asset impairment charge recorded in the fourth quarter of
2012. 
Write-off of Oil and Gas Rights 
We partially funded two exploratory hydrocarbon wells in New Zealand
in exchange for the right to purchase any natural gas discovered. Our
share of the exploration costs incurred was $17 million. We have no
future commitments under this arrangement. Based on exploration
results to date and the outlook for natural gas deliveries under this
arrangement, we have recorded a non-cash $17 million ($14 million
after-tax) charge to earnings in the second quarter of 2013 to write
off the carrying value of the asset.  
Finance Costs 


 
                                       Three Months Ended   Six Months Ended
                            ------------------------------------------------
                               Jun 30    Mar 31    Jun 30   Jun 30    Jun 30
($ millions)                     2013      2013      2012     2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finance costs before                                                        
 capitalized interest        $     17  $     16  $     17 $     33  $     33
Less capitalized interest          (2)       (1)        -       (3)        -
----------------------------------------------------------------------------
Finance costs                $     15 
 $     15  $     17 $     30  $     33
----------------------------------------------------------------------------

 
Finance costs before capitalized interest primarily relate to
interest expense on the unsecured notes and limited recourse debt
facilities. Capitalized interest relates to interest costs
capitalized for the Geismar projects. 
Finance Income and Other Expenses 


 
                                        Three Months Ended  Six Months Ended
                              ----------------------------------------------
                                 Jun 30   Mar 31    Jun 30   Jun 30   Jun 30
($ millions)                       2013     2013      2012     2013     2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finance income and other                                                    
 expenses                      $      3 $     (2) $      - $      1 $      2
----------------------------------------------------------------------------

 
The change in finance income and other expenses for all periods
presented was primarily due to the impact of changes in foreign
exchange rates. 
Income Taxes 
A summary of our income taxes for the second quarter of 2013 compared
with the first quarter of 2013 is as follows:  


 
                                    Three Months Ended   Three Months Ended 
                                         June 30, 2013       March 31, 2013 
                                  ------------------------------------------
                                              Adjusted             Adjusted 
                                        Net        Net       Net        Net 
($ millions, except where noted)     Income  Income(1)    Income  Income(1) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Amount before income tax           $     67  $     114  $     78  $     102 
Income tax expense                       (1)       (15)      (12)       (14)
----------------------------------------------------------------------------
Amount after income tax            $     66  $      99  $     66  $      88 
----------------------------------------------------------------------------
Effective tax rate                        2%        14%       15%        14%
----------------------------------------------------------------------------
                                                                            
(1) This item is a non-GAAP measure that does not have any standardized     
meaning prescribed by GAAP and therefore is unlikely to be comparable to    
similar measures presented by other companies. Refer to the Additional      
Information - Supplemental Non-GAAP Measures section for a description of   
the non-GAAP measure and reconciliation to the most comparable GAAP measure.

 
For the second quarter of 2013, the effective tax rate was 2%
compared with 15% for the first quarter of 2013. Adjusted net income
represents the amount that is attributable to Methanex shareholders
and excludes the mark-to-market impact of share-based compensation
and items that are considered by management to be non-operational.
The effective tax rate related to Adjusted net income was 14% for
each of the first and second quarters of 2013. 
We earn the majority of our pre-tax earnings in Trinidad, Egypt,
Chile, Canada and New Zealand. In Trinidad and Chile, the statutory
tax rate is 35% and in Egypt, the statutory tax rate is 25%. We have
significant loss carryforwards in Canada and New Zealand which have
not been recognized for accounting purposes and this had an impact on
the effective tax rate of the second quarter of 2013 of approximately
10%. In addition, as the Atlas entity is accounted for using the
equity method, any income taxes related to Atlas are included in
earnings of associate and therefore excluded from total income taxes. 
SUPPLY/DEMAND FUNDAMENTALS  
We estimate that methanol demand, excluding methanol demand from
integrated methanol to olefins facilities, is currently approximately
54 million tonnes on an annualized basis.  
The outlook for methanol demand growth continues to be strong.
Traditional chemical derivatives consume about two-thirds of global
methanol demand and growth is correlated to industrial production.  
Energy-related applications consume the remaining one third of global
methanol demand, and the wide disparity between the price of crude
oil and that of natural gas and coal has resulted in an increased use
of methanol in energy-related applications, such as direct methanol
blending into gasoline and DME and biodiesel production. Growth of
direct methanol blending into gasoline in China has been particularly
strong and we believe that future growth in this application is
supported by numerous provincial and national fuel-blending
standards, such as M15 or M85 (15% methanol and 85% methanol,
respectively).  
China is also leading the commercialization of methanol's use as a
feedstock to manufacture olefins. The use of methanol to produce
olefins, at current energy prices, is proving to be cost competitive
relative to the traditional production of olefins from naphtha. There
are now five methanol-to-olefins (MTO) plants operating in China with
the capacity to consume approximately seven million tonnes of
methanol annually. While three of these plants are integrated and
purchase methanol only to supplement their production, two of these
plants are dependent on merchant methanol supply. We believe demand
potential into energy-related applications and olefins production
will continue to grow.  
During the second quarter of 2013, overall market conditions remained
healthy and prices in North America and Europe increased. Our average
non-discounted price in the second quarter was $494 per tonne.
Entering the third quarter of 2013, market conditions and methanol
prices are stable. We recently announced our North American
non-discounted price for August at $532 per tonne, which is unchanged
from July. 
Over the next few years, there is a modest level of new capacity
expected to come on-stream relative to demand growth expectations.
There is a 0.8 million tonne plant expected to restart in
Channelview, Texas in 2013 and a 0.7 million tonne plant expected to
start up in Azerbaijan in 2013. We are in the process of restarting
our Waitara Valley facility and debottlenecking the Motunui
facilities in New Zealand and these initiatives are expected to add
up to 0.9 million tonnes of additional operating capacity by the end
of 2013. We are relocating two idle Chile facilities to Geismar,
Louisiana with the first 1.0 million tonne facility expected to start
up by the end of 2014 and the second 1.0 million tonne facility
expected to start up in early 2016. It has also been announced that a
1.3 million tonne plant in Clear Lake, Texas is targeted to start-up
in 2015. We expect that production from new capacity in China will be
consumed in that country and that higher cost production capacity in
China will need to operate in order to satisfy demand growth. 


 
              Methanex Non-Discounted Regional Posted Prices(1)             
----------------------------------------------------------------------------
                                     Jul         Jun         May         Apr
(US$ per tonne)                     2013        2013        2013        2013
----------------------------------------------------------------------------
United States                        532         532         532         516
Europe (2)                           505         505         505         505
Asia                                 450         450         450         450
----------------------------------------------------------------------------
                                                                            
(1) Discounts from our posted prices are offered to customers based on      
various factors.                                                            
                                                                            
(2) EUR390 for Q3 2013 (Q2 2013 - EUR390) converted to United States        
dollars.                                                                    

 
LIQUIDITY AND CAPITAL RESOURCES 
Cash flows from operating activities 
Cash flows from operating activities in the second quarter of 2013
were $125 million compared with $118 million for the first quarter of
2013 and $140 million for the second quarter of 2012. Cash flows from
operating activities for the six month period ended June 30, 2013
were $243 million compared with $214 million for the same period in
2012. The changes in cash flows from operating activities resulted
from changes in the following: 


 
                                        Q2 2013       Q2 2013   YTD Q2 2013 
                                  compared with compared with compared with 
($ millions)                            Q1 2013       Q2 2012   YTD Q2 2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Change in Adjusted EBITDA                                                   
 (attributable to Methanex                                                  
 shareholders)                      $         8   $        44   $       101 
Exclude change in Adjusted EBITDA                                           
 of associate (Atlas)                        (9)           (6)          (18)
Cash flows attributable to non-                                             
 controlling interests                        8            (2)          (11)
Changes in non-cash working                                                 
 capital                                     11           (25)            1 
Income taxes paid                             2            (4)           (5)
Geismar project relocation                                                  
 expenses                                   (34)          (30)          (30)
Share-based payments                         18             4            (2)
Other                                         3             4            (7)
----------------------------------------------------------------------------
Increase (decrease) in cash flows                                           
 from operating activities          $         7   $       (15)  $        29 
----------------------------------------------------------------------------

 
Adjusted cash flows from operating activities 
Adjusted cash flows from operating activities, which includes an
amount representing the cash flows associated with our 63.1% share of
the Atlas facility and excludes the amount associated with the 40%
non-controlling interest in the methanol facility in Egypt and
changes in non-cash working capital, were $158 million in the second
quarter of 2013 compared with $127 million for the first quarter of
2013 and $110 million for the second quarter of 2012. Adjusted cash
flows for the six month period ended June 30, 2013 were $286 million
compared with $199 million for the same period in 2012. The changes
in Adjusted cash flows from operating activities resulted from
changes in the following: 


 
                                        Q2 2013       Q2 2013   YTD Q2 2013 
                                  compared with compared with compared with 
($ millions)                            Q1 2013       Q2 2012   YTD Q2 2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Change in Adjusted EBITDA                                                   
 (attributable to Methanex                                                  
 shareholders)                      $         8  $         44   $       101 
Income taxes paid                             2            (4)           (5)
Share-based payments                         18             4            (2)
Other                                         3             4            (7)
----------------------------------------------------------------------------
Increase in Adjusted cash flows                                             
 from operating activities          $        31  $         48   $        87 
----------------------------------------------------------------------------

 
Refer to the Additional Information - Supplemental Non-GAAP Measures
section for a reconciliation of Adjusted cash flows from operating
activities to the most comparable GAAP measure. 
During the second quarter of 2013, we paid a quarterly dividend of
$0.20 per share, or $19 million. 
We operate in a highly competitive commodity industry and believe it
is appropriate to maintain a conservative balance sheet and retain
financial flexibility. At June 30, 2013, our cash balance was $709
million, including $37 million related to the non-controlling
interest in Egypt. 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. We have a strong
balance sheet and an undrawn $400 million credit facility provided by
highly rated financial institutions that expires in mid-2016. 
Our planned capital maintenance expenditure program directed towards
maintenance, turnarounds and catalyst changes for existing operations
is currently estimated to total approximately $110 million to the end
of 2014, excluding the New Zealand operations. We are making good
progress with our initiatives to increase operating capacity in
Medicine Hat and New Zealand. Remaining capital expenditures for
these projects to the end of 2013 are approximately $170 million. We
are relocating two methanol plants from our Chile site to Geismar,
Louisiana. During the second quarter of 2013, capital expenditures
related to the Geismar projects were $54 million. Remaining capital
expenditures related to the Geismar projects are approximately $850
million. We believe that we have the financial capacity to fund these
growth initiatives with cash on hand, cash generated from operations
and the undrawn bank facility. 
We believe we are well positioned to meet our financial commitments,
invest to grow the Company and continue to deliver on our commitment
to return excess cash to shareholders. 
SHORT-TERM OUTLOOK  
Entering the third quarter, market conditions and methanol prices are
stable.  
The methanol price will ultimately depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions and the strength of global demand. We believe that
our financial position and financial flexibility, outstanding global
supply network and competitive-cost position will provide a sound
basis for Methanex to continue to be the leader in the methanol
industry and to invest to grow the Company. 
CONTROLS AND PROCEDURES 
For the three months ended June 30, 2013, 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. 
ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES  
In addition to providing measures prepared in accordance with
International Financial Reporting Standards (IFRS), we present
certain supplemental non-GAAP measures. These are Adjusted EBITDA,
Adjusted net income, Adjusted net income per common share, operating
income and Adjusted cash flows from operating activities. These
measures do not have any standardized meaning prescribed by generally
accepted accounting principles (GAAP) and therefore are unlikely to
be comparable to similar measures presented by other companies. These
supplemental non-GAAP measures are provided to assist readers in
determining our ability to generate cash from operations and improve
the comparability of our results from one period to another. We
believe these measures are useful in assessing operating performance
and liquidity of the Company's ongoing business 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 (attributable to Methanex shareholders) 
Adjusted EBITDA differs from the most comparable GAAP measure, net
income attributable to Methanex shareholders, because it excludes
depreciation and amortization, finance costs, finance income and
other expenses, income tax expense, mark-to-market impact of
share-based compensation, Geismar project relocation expenses and
write-off of oil and gas rights. Adjusted EBITDA includes an amount
representing our 63.1% interest in the Atlas facility and our 60%
interest in the methanol facility in Egypt.  
Adjusted EBITDA and Adjusted net income exclude the mark-to-market
impact of share-based compensation related to the impact of changes
in our share price on share appreciation rights, tandem share
appreciation rights, deferred share units, restricted share units and
performance share units. The mark-to-market impact related to
performance share units that is excluded from Adjusted EBITDA and
Adjusted net income is calculated as the difference between the grant
date value determined using a Methanex total shareholder return
factor of 100% and the fair value recorded at each period end. As
share-based awards will be settled in future periods, the ultimate
value of the units is unknown at the date of grant and therefore the
grant date value recognized in Adjusted EBITDA and Adjusted net
income may differ from the total settlement cost.  
The following table shows a reconciliation from net income
attributable to Methanex shareholders to Adjusted EBITDA: 


 
                                       Three Months Ended  Six Months Ended 
                               ---------------------------------------------
                                 Jun 30   Mar 31   Jun 30   Jun 30   Jun 30 
($ millions)                       2013     2013     2012     2013     2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to                                                  
 Methanex shareholders          $    54  $    60  $    52  $   114  $    74 
  Mark-to-market impact of                                                  
   share-based compensation           9       31      (11)      40        7 
  Depreciation and amortization      29       30       38       59       74 
  Geismar project relocation                                                
   expenses                          34        -        4       34        4 
  Write-off of oil and gas                                                  
   rights                            17        -        -       17        - 
  Finance Costs                      15       15       17       30       33 
  Finance Income and other                                                  
   expenses                          (3)       2        -       (1)      (2)
  Income tax expense                  1       12       13       13       24 
  Earnings of associate,                                                    
   excluding amount included in                                             
   Adjusted EBITDA (1)               12        8       11       20       15 
  Non-controlling interests                                                 
   adjustment (1)                   (11)      (9)     (11)     (19)     (23)
----------------------------------------------------------------------------
Adjusted EBITDA (attributable                                               
 to Methanex shareholders)      $   157  $   149  $   113  $   307  $   206 
----------------------------------------------------------------------------
                                                                            
(1) These adjustments represent depreciation and amortization, finance      
costs, finance income and other expenses and income tax expense associated  
with the 40% non-controlling interest in the methanol facility in Egypt and 
our 63.1% interest in the Atlas methanol facility.                          

 
Adjusted Net Income and Adjusted Net Income per Common Share 
Adjusted net income and Adjusted net income per common share are
non-GAAP measures because they exclude the mark-to-market impact of
share-based compensation and items that are considered by management
to be non-operational, including Geismar project relocation expenses
and write-off of oil and gas rights. The following table shows a
reconciliation of net income attributable to Methanex shareholders to
Adjusted net income and the calculation of Adjusted net income per
common share:  


 
                                       Three Months Ended  Six Months Ended 
                               ---------------------------------------------
($ millions except number of     Jun 30   Mar 31   Jun 30   Jun 30   Jun 30 
 shares and per share amounts)     2013     2013     2012     2013     2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to                                                  
 Methanex shareholders          $    54  $    60  $    52  $   114  $    74 
  Mark-to-market impact of                                                  
   share-based compensation           9       31      (11)      40        7 
  Geismar project relocation                                                
   expenses                          34        -        4       34        4 
  Write-off of oil and gas                                                  
   rights                            17        -        -       17        - 
  Income tax recovery related                                               
   to above items                   (15)      (3)      (1)     (19)      (2)
----------------------------------------------------------------------------
Adjusted net income             $    99  $    88  $    44  $   186  $    83 
----------------------------------------------------------------------------
Diluted weighted average shares                                             
 outstanding (millions)              96       96       95       96       95 
Adjusted net income per common                                              
 share                          $  1.02  $  0.92  $  0.47  $  1.94  $  0.88 
----------------------------------------------------------------------------

 
Adjusted Cash Flows from Operating Activities (attributable to
Methanex shareholders) 
Adjusted cash flows from operating activities differs from the most
comparable GAAP measure, cash flows from operating activities,
because it includes cash flows associated with our 63.1% equity share
of the Atlas facility and does not include cash flows associated with
the 40% non-controlling interest in the methanol facility in Egypt or
changes in non-cash working capital.  
The following table shows a reconciliation of cash flows from
operating activities to Adjusted cash flows from operating
activities:  


 
                                       Three Months Ended  Six Months Ended 
                               ---------------------------------------------
                                 Jun 30   Mar 31   Jun 30   Jun 30   Jun 30 
($ millions)                       2013     2013     2012     2013     2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flows from operating                                                   
 activities                     $   125  $   118  $   140  $   243  $   214 
Add (deduct):                                                               
  Cash flows related to                                                     
   associate (Atlas) (1)             18        9       12       27        9 
  Cash flows related to non-                                                
   controlling interests (2)        (23)     (15)     (25)     (37)     (48)
  Changes in non-cash working                                               
   capital                            4       15      (21)      19       20 
  Geismar project relocation                                                
   expenses                          34        -        4       34        4 
----------------------------------------------------------------------------
Adjusted cash flows from                                                    
 operating activities                                                       
 (attributable to Methanex                                                  
 shareholders)                  $   158  $   127  $   110  $   286  $   199 
----------------------------------------------------------------------------
                                                                            
(1) Cash flows related to associate represents the cash flows from operating
activities from our 63.1% equity share of the Atlas facility that is        
accounted for using the equity method.                                      
(2) Cash flows related to non-controlling interests represents the amount of
cash flows from operating activities attributable to non-controlling        
interests that are consolidated in the financial statements.                

 
Operating Income 
Operating income is reconciled directly to a GAAP measure in our
consolidated statements of income. 
QUARTERLY FINANCIAL DATA (UNAUDITED) 
A summary of selected financial information for the prior eight
quarters is as follows: 


 
                                                  Three Months Ended        
                                          ----------------------------------
                                            Jun 30  Mar 31  Dec 31   Sep 30 
($ millions, except per share amounts)        2013    2013    2012     2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue                                    $   733 $   652 $   668  $   608 
Adjusted EBITDA (1,2)                          157     149     119      104 
Net income (loss) (1)                           54      60    (140)      (3)
Adjusted net income (1,2)                       99      88      61       36 
Basic net income (loss) per common share                                    
 (1)                                          0.57    0.64   (1.49)   (0.03)
Diluted net income (loss) per common share                                  
 (1)                                          0.56    0.63   (1.49)   (0.03)
Adjusted net income per share (1,2)           1.02    0.92    0.64     0.38 
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                   Three Months Ended       
                                            --------------------------------
                                              Jun 30  Mar 31  Dec 31  Sep 30
($ millions, except per share amounts)          2012    2012    2011    2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue                                      $   613 $   654 $   696 $   670
Adjusted EBITDA (1,2)                            113      93     133     111
Net income (1)                                    52      22      64      62
Adjusted net income (1,2)                         44      39      65      40
Basic net income per common share (1)           0.56    0.24    0.69    0.67
Diluted net income per common share (1)         0.50    0.23    0.68    0.59
Adjusted net income per share (1,2)             0.47    0.41    0.69    0.43
----------------------------------------------------------------------------
                                                                            
(1) Attributable to Methanex Corporation shareholders.                      
(2) These items are non-GAAP measures that do not have any standardized     
meaning prescribed by GAAP and therefore are unlikely to be comparable to   
similar measures presented by other companies. Refer to the Additional      
Information - Supplemental Non-GAAP Measures section for a description of   
each non-GAAP measure and reconciliations to the most comparable GAAP       
measures.                                                                   

 
FORWARD-LOOKING INFORMATION WARNING  
This Second Quarter 2013 Management's Discussion and Analysis
("MD&A") as well as comments made during the Second Quarter 2013
investor conference call contain forward-looking statements with
respect to us and our industry. These statements relate to future
events or our future performance. All statements other than
statements of historical fact are forward-looking statements.
Statements that include the words "believes," "expects," "may,"
"will," "should," "potential," "estimates," "anticipates," "aim,"
"goal" or other comparable terminology and similar statements of a
future or forward-looking nature identify forward-looking statements. 
More particularly and without limitation, any statements regarding
the following are forward-looking statements: 


 
--  expected demand for methanol and its derivatives, 
    
--  expected new methanol supply or restart of idled capacity and timing for
    start-up of the same, 
    
--  expected shutdowns (either temporary or permanent) or restarts of
    existing methanol supply (including our own facilities), including,
    without limitation, the timing and length of planned maintenance
    outages, 
    
--  expected methanol and energy prices, 
    
--  expected levels of methanol purchases from traders or other third
    parties, 
    
--  expected levels, timing and availability of economically priced natural
    gas supply to each of our plants, 
    
--  capital committed by third parties towards future natural gas
    exploration and development in the vicinity of our plants, 
    
--  our expected capital expenditures, including, without limitation, those
    to support natural gas exploration and development for our plants and
    the restart of our idled methanol facilities, 
    
--  anticipated production rates of our plants, 
    
--  expected operating costs, including natural gas feedstock costs and
    logistics costs, 
    
--  expected tax rates or resolutions to tax disputes, 
    
--  expected cash flows, earnings capability and share price, 
    
--  availability of committed credit facilities and other financing, 
    
--  ability to meet covenants or obtain waivers associated with our long-
    term debt obligations, including, without limitation, the Egypt limited
    recourse debt facilities that have conditions associated with upstream
    natural gas development and the finalization of certain land title
    registration and related mortgages that require action by Egyptian
    governmental entities, 
    
--  our shareholder distribution strategy and anticipated distributions to
    shareholders, 
    
--  commercial viability and timing of, or our ability to execute, future
    projects, plant restarts, capacity expansions, plant relocations, or
    other business initiatives or opportunities, including the planned
    relocation of idle Chile methanol plants to Geismar, Louisiana
    ("Geismar") and certain initiatives in New Zealand and Canada, 
    
--  our financial strength and ability to meet future financial commitments,
    
--  expected global or regional economic activity (including industrial
    production levels), 
    
--  expected outcomes of litigation or other disputes, claims and
    assessments, 
    
--  expected actions of governments, government agencies, gas suppliers,
    courts, tribunals or other third parties, and 
    
--  expected impact on our operations in Egypt or our financial condition as
    a consequence of civil unrest or actions taken or inaction by the
    Government of Egypt and its agencies. 

 
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, including, without
limitation, future expectations and assumptions concerning the
following:  


 
--  the supply of, demand for, and price of methanol, methanol derivatives,
    natural gas, coal, oil and oil derivatives, 
    
--  the success of our natural gas exploration and development in Chile and
    our ability to procure economically priced natural gas in Chile, New
    Zealand, Trinidad, Canada and the United States, 
    
--  production rates of our facilities, 
    
--  receipt of remaining required permits in connection with our Geismar
    projects, 
    
--  receipt or issuance of third-party consents or approvals, including,
    without limitation, governmental registrations of land title and related
    mortgages in Egypt, governmental approvals related to natural gas
    exploration rights or rights to purchase natural gas, 
    
--  receipt of governmental approvals related to natural gas exploration
    rights, 
    
--  the establishment of new fuel standards, 
    
--  operating costs including natural gas feedstock and logistics costs,
    capital costs, tax rates, cash flows, foreign exchange rates and
    interest rates, 
    
--  the availability of committed credit facilities and other financing, 
    
--  timing of completion and cost of our Geismar projects and our
    initiatives to increase production in New Zealand and Canada, 
    
--  global and regional economic activity (including industrial production
    levels), 
    
--  absence of a material negative impact from major natural disasters, 
    
--  absence of a material negative impact from changes in laws or
    regulations, 
    
--  absence of a material negative impact from political instability in the
    countries in which we operate, 
    
--  enforcement of contractual arrangements and ability to perform
    contractual obligations by customers, natural gas and other suppliers
    and other third parties, and 
    
--  satisfaction of conditions precedent contained in the Geismar I natural
    gas supply agreement. 

 
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 primarily include those attendant with
producing and marketing methanol and successfully carrying out major
capital expenditure projects in various jurisdictions, including,
without limitation: 


 
--  conditions in the methanol and other industries including fluctuations
    in the supply, demand for and price of methanol and its derivatives,
    including demand for methanol for energy uses, 
    
--  the price of natural gas, coal, oil and oil derivatives, 
    
--  the success of natural gas exploration and development activities in
    southern Chile and our ability to obtain any additional gas in Chile and
    New Zealand on commercially acceptable terms, 
    
--  the ability to successfully carry out corporate initiatives and
    strategies, 
    
--  actions of competitors, suppliers and financial institutions, 
    
--  conditions within the natural gas delivery systems that may prevent
    delivery of our natural gas supply requirements, 
    
--  competing demand for natural gas, especially with respect to domestic
    needs for gas and electricity in Chile and Egypt, 
    
--  actions of governments and governmental authorities, including, without
    limitation, the implementation of policies or other measures that could
    impact the supply of or demand for methanol or its derivatives, 
    
--  changes in laws or regulations, 
    
--  import or export restrictions, anti-dumping measures, increases in
    duties, taxes and government royalties, and other actions by governments
    that may adversely affect our operations or existing contractual
    arrangements, 
    
--  world-wide economic conditions, 
    
--  satisfaction of conditions precedent contained in the Geismar I natural
    gas supply agreement, and 
    
--  other risks described in our 2012 Management's Discussion and Analysis
    and this Second Quarter 2013 Management's Discussion and Analysis.  

 
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 except as required by applicable
securities laws.  
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 Adjusted EBITDA (refer to the
Additional Information - Supplemental Non-GAAP Measures section for a
description of each non-GAAP measure and reconciliations to the most
comparable GAAP measures).  
In addition to the methanol that we produce at our facilities
("Methanex-produced methanol"), we also purchase and re-sell methanol
produced by others ("purchased methanol") and we sell methanol on a
commission basis. We analyze the results of all methanol sales
together, excluding commission sales volumes. The key drivers of
changes in Adjusted EBITDA are average realized price, cash costs and
sales volume which 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.                                             
                                                                            
CASH COST   The change in 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 the current period total     
            methanol sales volume excluding commission sales volume in the  
            current period. The cash costs per tonne is the weighted average
            of the cash cost per tonne of Methanex-produced methanol and the
            cash cost per tonne of purchased methanol. The cash cost per    
            tonne of Methanex-produced methanol includes absorbed fixed cash
            costs per tonne and variable cash costs per tonne. The cash cost
            per tonne of purchased methanol consists principally of the cost
            of methanol itself. In addition, the change in Adjusted EBITDA  
            as a result of changes in cash costs includes the changes from  
            period to period in unabsorbed fixed production costs,          
            consolidated selling, general and administrative expenses and   
            fixed storage and handling costs.                               
                                                                            
VOLUME      The change in Adjusted EBITDA as a result of changes in sales   
            volume is calculated as the difference from period to period in 
            total methanol sales volume excluding commission sales volumes  
            multiplied by the margin per tonne for the prior period. The    
            margin per tonne for the prior period is the weighted average   
            margin per tonne of Methanex-produced methanol and margin per   
            tonne of purchased methanol. The margin per tonne for Methanex- 
            produced methanol is calculated as the selling price per tonne  
            of methanol less absorbed fixed cash costs per tonne and        
            variable cash costs per tonne. The margin per tonne for         
            purchased methanol is calculated as the selling price per tonne 
            of methanol less the cost of purchased methanol per tonne.      

 
We own 63.1% of the Atlas methanol facility and market the remaining
36.9% of its production through a commission offtake agreement. A
contractual agreement between us and our partners establishes joint
control over Atlas. As a result, we account for this investment using
the equity method of accounting, which results in 63.1% of the net
assets and net earnings of Atlas being presented separately in the
consolidated statements of financial position and consolidated
statements of income, respectively. For purposes of analyzing our
business, Adjusted EBITDA, Adjusted net income, Adjusted net income
per common share and Adjusted cash flows from operating activities
include an amount representing our 63.1% equity share in Atlas. 
We own 60% of the 1.26 million tonne per year Egypt methanol facility
and market the remaining 40% of its production through a commission
offtake agreement. We account for this investment using consolidation
accounting, which results in 100% of the revenues and expenses being
included in our financial statements with the other investors'
interests in the methanol facility being presented as
"non-controlling interests". For purposes of analyzing our business,
Adjusted EBITDA, Adjusted net income, Adjusted net income per common
share and Adjusted cash flows from operating activities exclude the
amount associated with the other investors' 40% non-controlling
interests. 


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

 
                             Three Months Ended            Six Months Ended 
                    --------------------------------------------------------
                           Jun 30        Jun 30        Jun 30        Jun 30 
                             2013          2012          2013          2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   (As adjusted                (As adjusted 
                                     - note 12)                  - note 12) 
Revenue              $    733,099  $    613,783  $  1,384,998  $  1,267,321 
Cost of sales and                                                           
 operating expenses      (580,116)     (474,892)   (1,108,111)   (1,027,856)
Depreciation and                                                            
 amortization             (28,953)      (38,564)      (58,770)      (73,965)
Geismar project                                                             
 relocation expenses                                                        
 (note 3)                 (33,867)       (3,686)      (33,867)       (3,686)
Write-off of oil and                                                        
 gas rights (note 4)      (16,859)            -       (16,859)            - 
----------------------------------------------------------------------------
Operating income           73,304        96,641       167,391       161,814 
Earnings (loss) of                                                          
 associate (note 5)         6,017         1,315         7,303        (6,013)
Finance costs (note                                                         
 7)                       (14,618)      (17,590)      (30,069)      (33,623)
Finance income and                                                          
 other expenses             2,698          (281)        1,071         1,557 
----------------------------------------------------------------------------
Income before income                                                        
 tax expense               67,401        80,085       145,696       123,735 
Income tax expense:                                                         
  Current                 (23,276)      (10,853)      (27,667)      (16,150)
  Deferred                 21,726        (3,087)       14,055        (8,629)
----------------------------------------------------------------------------
                           (1,550)      (13,940)      (13,612)      (24,779)
----------------------------------------------------------------------------
Net income           $     65,851  $     66,145  $    132,084  $     98,956 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:                                                            
  Methanex                                                                  
   Corporation                                                              
   shareholders            53,999        52,238       114,266        74,319 
  Non-controlling                                                           
   interests               11,852        13,907        17,818        24,637 
----------------------------------------------------------------------------
                     $     65,851  $     66,145  $    132,084  $     98,956 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Income per share for the period attributable to Methanex Corporation        
 shareholders                                                               
  Basic net income                                                          
   per common share                                                         
   (note 8)          $       0.57  $       0.56  $       1.21  $       0.80 
  Diluted net income                                                        
   per common share                                                         
   (note 8)          $       0.56  $       0.50  $       1.19  $       0.78 
                                                                            
Weighted average                                                            
 number of common                                                           
 shares outstanding                                                         
 (note 8)              95,116,950    93,781,404    94,817,234    93,445,231 
Diluted weighted                                                            
 average number of                                                          
 common shares                                                              
 outstanding (note                                                          
 8)                    96,260,035    95,119,964    95,998,786    94,772,610 
                                                                            
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
                                                                            
                                                                            
Methanex Corporation                                                        
Consolidated Statements of Comprehensive Income (unaudited)                 
(thousands of U.S. dollars)                                                 
                                                                            
                                     Three Months Ended    Six Months Ended 
                                    ----------------------------------------
                                       Jun 30    Jun 30    Jun 30    Jun 30 
                                         2013      2012      2013      2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income                           $ 65,851  $ 66,145  $132,084  $ 98,956 
  Other comprehensive income (loss),                                        
   net of taxes:                                                            
    Items that may be reclassified                                          
     to income:                                                             
      Change in fair value of                                               
       forward exchange contracts      (4,262)     (566)   (4,446)     (871)
      Change in fair value of                                               
       interest rate swap contracts        (4)     (747)     (300)   (3,360)
      Realized loss on interest rate                                        
       swap contracts reclassified                                          
       to finance costs                 2,792     2,766     5,383     5,702 
----------------------------------------------------------------------------
                                       (1,474)    1,453       637     1,471 
----------------------------------------------------------------------------
Comprehensive income                 $ 64,377  $ 67,598  $132,721  $100,427 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:                                                            
Methanex Corporation shareholders      51,410    52,883   112,870    74,853 
Non-controlling interests              12,967    14,715    19,851    25,574 
----------------------------------------------------------------------------
                                     $ 64,377  $ 67,598  $132,721  $100,427 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
                                                                            
                                                                            
Methanex Corporation                                                        
Consolidated Statements of Financial Position (unaudited)                   
(thousands of U.S. dollars)                                                 
                                                                            
                                                                            
                                                       Jun 30        Dec 31 
AS AT                                                    2013          2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                               (As adjusted 
                                                                 - note 12) 
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                       $   708,514   $   727,385 
  Trade and other receivables                         477,261       417,156 
  Inventories (note 2)                                270,936       256,340 
  Prepaid expenses                                     31,228        25,588 
----------------------------------------------------------------------------
                                                    1,487,939     1,426,469 
Non-current assets:                                                         
  Property, plant and equipment (note 3)            1,902,849     1,762,873 
  Investment in associate (note 5)                    192,052       184,665 
  Other assets                                         57,672        68,554 
----------------------------------------------------------------------------
                                                    2,152,573     2,016,092 
----------------------------------------------------------------------------
                                                  $ 3,640,512   $ 3,442,561 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Trade, other payables and accrued liabilities   $   484,353   $   377,666 
  Current maturities on long-term debt (note 6)        40,444        38,290 
  Current maturities on other long-term                                     
   liabilities                                         53,612        30,322 
----------------------------------------------------------------------------
                                                      578,409       446,278 
Non-current liabilities:                                                    
  Long-term debt (note 6)                           1,146,122     1,156,081 
  Other long-term liabilities                         179,724       200,212 
  Deferred income tax liabilities                     149,822       162,253 
----------------------------------------------------------------------------
                                                    1,475,668     1,518,546 
Equity:                                                                     
  Capital stock                                       513,065       481,779 
  Contributed surplus                                   8,787        15,481 
  Retained earnings                                   883,336       805,661 
  Accumulated other comprehensive loss                (14,441)      (13,045)
----------------------------------------------------------------------------
  Shareholders' equity                              1,390,747     1,289,876 
  Non-controlling interests                           195,688       187,861 
----------------------------------------------------------------------------
  Total equity                                      1,586,435     1,477,737 
----------------------------------------------------------------------------
                                                  $ 3,640,512   $ 3,442,561 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to condensed consolidated interim financial          
 statements.                                                                
                                                                            
                                                                            
Methanex Corporation                                                        
Consolidated Statements of Changes in Equity (unaudited)                    
(thousands of U.S. dollars, except number of common shares)                 
                                                                            
                                                                            
                          Number of                                         
                             Common       Capital   Contributed    Retained 
                             Shares         Stock       Surplus    Earnings 
----------------------------------------------------------------------------
Balance, December 31,                                                       
 2011                    93,247,755 $     455,434 $      22,281  $  942,978 
  Net income                      -             -             -      74,319 
  Other comprehensive                                                       
   income                         -             -             -           - 
  Compensation expense                                                      
   recorded for stock                                                       
   options                        -             -           403           - 
  Issue of shares on                                                        
   exercise of stock                                                        
   options                  569,487        10,267             -           - 
  Reclassification of                                                       
   grant date fair                                                          
   value on exercise of                                                     
   stock options                  -         3,891        (3,891)          - 
  Dividend payments to                                                      
   Methanex Corporation                                                     
   shareholders                   -             -             -     (33,265)
  Distributions to non-                                                     
   controlling                                                              
   interests                      -             -             -           - 
  Equity contributions                                                      
   by non-controlling                                                       
   interests                      -             -             -           - 
----------------------------------------------------------------------------
Balance, June 30, 2012   93,817,242       469,592        18,793     984,032 
  Net income                                                       (142,424)
  Other comprehensive                                                       
   Income (loss)                                                     (1,135)
  Compensation expense                                                      
   recorded for stock                                                       
   options                        -             -           323           - 
  Issue of shares on                                                        
   exercise of stock                                                        
   options                  492,728         8,552             -           - 
  Reclassification of                                                       
   grant date fair                                                          
   value on exercise of                                                     
   stock options                  -         3,635        (3,635)          - 
  Dividend payments to                                                      
   Methanex Corporation                                                     
   shareholders                   -             -             -     (34,812)
  Distributions to non-                                                     
   controlling                                                              
   interests                      -             -             -           - 
----------------------------------------------------------------------------
Balance, December 31,                                                       
 2012                    94,309,970       481,779        15,481     805,661 
  Net income                      -             -             -     114,266 
  Other comprehensive                                                       
   income (loss)                  -             -             -           - 
  Compensation expense                                                      
   recordedfor stock                                                        
   options                        -             -           441           - 
  Issue of shares on                                                        
   exercise of stock                                                        
   options                1,018,520        24,151             -           - 
  Reclassification of                                                       
   grant datefair value                                                     
   on exercise ofstock                                                      
   options                        -         7,135        (7,135)          - 
  Dividend payments to                                                      
   Methanex Corporation                                                     
   shareholders                   -             -             -     (36,591)
  Distributions to non-                                                     
   controlling                                                              
   interests                      -             -             -           - 
  Equity contributions                                                      
   by non-controlling                                                       
   interests                      -             -             -           - 
----------------------------------------------------------------------------
Balance, June 30, 2013   95,328,490 $     513,065 $       8,787  $  883,336 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
                          Accumulated                                       
                                Other                      Non-             
                        Comprehensive Shareholders' Controlling       Total 
                                 Loss        Equity   Interests      Equity 
----------------------------------------------------------------------------
Balance, December 31,                                                       
 2011                   $     (15,968) $  1,404,725  $  197,238  $1,601,963 
  Net income                        -        74,319      24,637      98,956 
  Other comprehensive                                                       
   income                         534           534         937       1,471 
  Compensation expense                                                      
   recorded for stock                                                       
   options                          -           403           -         403 
  Issue of shares on                                                        
   exercise of stock                                                        
   options                          -        10,267           -      10,267 
  Reclassification of                                                       
   grant date fair                                                          
   value on exercise of                                                     
   stock options                    -             -           -           - 
  Dividend payments to                                                      
   Methanex Corporation                                                     
   shareholders                     -       (33,265)          -     (33,265)
  Distributions to non-                                                     
   controlling                                                              
   interests                        -             -     (12,659)    (12,659)
  Equity contributions                                                      
   by non-controlling                                                       
   interests                        -             -       1,000       1,000 
----------------------------------------------------------------------------
Balance, June 30, 2012        (15,434)    1,456,983     211,153   1,668,136 
  Net income                        -      (142,424)      8,893    (133,531)
  Other comprehensive                                                       
   Income (loss)                2,389         1,254       1,224       2,478 
  Compensation expense                                                      
   recorded for stock                                                       
   options                          -           323           -         323 
  Issue of shares on                                                        
   exercise of stock                                                        
   options                          -         8,552           -       8,552 
  Reclassification of                                                       
   grant date fair                                                          
   value on exercise of                                                     
   stock options                    -             -           -           - 
  Dividend payments to                                                      
   Methanex Corporation                                                     
   shareholders                     -       (34,812)          -     (34,812)
  Distributions to non-                                                     
   controlling                                                              
   interests                        -             -     (33,409)    (33,409)
----------------------------------------------------------------------------
Balance, December 31,                                                       
 2012                         (13,045)    1,289,876     187,861   1,477,737 
  Net income                        -       114,266      17,818     132,084 
  Other comprehensive                                                       
   income (loss)               (1,396)       (1,396)      2,033         637 
  Compensation expense                                                      
   recordedfor stock                                                        
   options                          -           441           -         441 
  Issue of shares on                                                        
   exercise of stock                                                        
   options                          -        24,151           -      24,151 
  Reclassification of                                                       
   grant datefair value                                                     
   on exercise ofstock                                                      
   options                          -             -           -           - 
  Dividend payments to                                                      
   Methanex Corporation                                                     
   shareholders                     -       (36,591)          -     (36,591)
  Distributions to non-                                                     
   controlling                                                              
   interests                        -             -     (13,024)    (13,024)
  Equity contributions                                                      
   by non-controlling                                                       
   interests                        -             -       1,000       1,000 
----------------------------------------------------------------------------
Balance, June 30, 2013  $     (14,441) $  1,390,747  $  195,688  $1,586,435 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to condensed consolidated interim financial          
statements.                                                                 
                                                                            
                                                                            
Methanex Corporation                                                        
Consolidated Statements of Cash Flows (unaudited)                           
(thousands of U.S. dollars)                                                 
                                                                            
                                    Three Months Ended     Six Months Ended 
                                  ------------------------------------------
                                      Jun 30    Jun 30     Jun 30    Jun 30 
                                        2013      2012       2013      2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                   (As                  (As 
                                              adjusted             adjusted 
                                                - note               - note 
                                                   12)                  12) 
CASH FLOWS FROM OPERATING                                                   
 ACTIVITIES                                                                 
  Net income                       $  65,851  $ 66,145  $ 132,084  $ 98,956 
  Add (deduct) loss (earnings) of                                           
   associate                          (6,017)   (1,315)    (7,303)    6,013 
  Add (deduct) non-cash items:                                              
    Depreciation and amortization     28,953    38,564     58,770    73,965 
    Write-off of oil and gas                                                
     rights                           16,859         -     16,859         - 
    Income tax expense                 1,550    13,940     13,612    24,779 
    Share-based compensation                                                
     expense (recovery)               15,694    (3,518)    52,007    21,540 
    Finance costs                     14,618    17,590     30,069    33,623 
    Other                               (765)   (2,828)      (301)    2,958 
  Income taxes paid                   (6,568)   (3,211)   (15,351)  (10,285)
  Other cash payments, including                                            
   share-based compensation             (440)   (3,507)   (17,995)  (15,537)
----------------------------------------------------------------------------
  Cash flows from operating                                                 
   activities before undernoted      129,735   121,860    262,451   236,012 
  Changes in non-cash working                                               
   capital (note 10)                  (3,986)   18,173    (19,023)  (22,021)
----------------------------------------------------------------------------
                                     125,749   140,033    243,428   213,991 
----------------------------------------------------------------------------
                                                                            
CASH FLOWS FROM FINANCING                                                   
 ACTIVITIES                                                                 
  Dividend payments to Methanex                                             
   Corporation shareholders          (19,057)  (17,357)   (36,591)  (33,265)
  Interest paid, including                                                  
   interest rate swap settlements     (6,546)     (762)   (27,757)  (25,011)
  Net proceeds on issue of long-                                            
   term debt                               -         -          -   246,548 
  Repayment of long-term debt and                                           
   limited recourse debt              (1,213)     (612)   (19,480)  (17,766)
  Equity contributions by non-                                              
   controlling interests                   -         -      1,000     1,000 
  Cash distributions to non-                                                
   controlling interests              (7,759)   (3,254)   (13,024)  (15,999)
  Proceeds from limited recourse                                            
   debt                                    -         -     10,000         - 
  Proceeds on issue of shares on                                            
   exercise of stock options          11,063     2,199     24,151    10,267 
  Other                                 (936)     (846)    (1,855)  (14,296)
----------------------------------------------------------------------------
                                     (24,448)  (20,632)   (63,556)  151,478 
----------------------------------------------------------------------------
                                                                            
CASH FLOWS FROM INVESTING                                                   
 ACTIVITIES                                                                 
  Property, plant and equipment      (62,613)  (39,010)   (96,232)  (75,765)
  Geismar plants under                                                      
   construction                      (53,679)   (8,527)   (97,077)  (14,323)
  Oil and gas assets                  (6,132)   (5,154)   (13,788)  (11,955)
  GeoPark repayments                   1,174     3,409      8,038    10,039 
  Changes in non-cash working                                               
   capital related to investing                                             
   activities (note 10)                1,612   (14,147)       316    (1,315)
----------------------------------------------------------------------------
                                    (119,638)  (63,429)  (198,743)  (93,319)
----------------------------------------------------------------------------
  Increase (decrease) in cash and                                           
   cash equivalents                  (18,337)   55,972    (18,871)  272,150 
  Cash and cash equivalents,                                                
   beginning of period               726,851   557,623    727,385   341,445 
----------------------------------------------------------------------------
  Cash and cash equivalents, end                                            
   of period                       $ 708,514  $613,595  $ 708,514  $613,595 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to condensed consolidated interim financial          
statements.                                                                 
                                                                            
                                                                            
Methanex Corporation                                                        
Notes to Condensed Consolidated Interim Financial Statements (unaudited)    
Except where otherwise noted, tabular dollar amounts are stated in thousands
of U.S. dollars.                                                            

 
1. Basis of presentation: 
Methanex Corporation (the Company) is an incorporated entity with
corporate offices in Vancouver, Canada. The Company's operations
consist of the production and sale of methanol, a commodity chemical.
The Company is the world's largest supplier of methanol to major
international markets in Asia Pacific, North America, Europe and
Latin America. 
These condensed consolidated interim financial statements are
prepared in accordance with International Accounting Standards (IAS)
34, Interim Financial Reporting, as issued by the International
Accounting Standards Board (IASB) on a basis consistent with those
followed in the most recent annual consolidated financial statements,
except as described in note 12 below. As described in note 12, the
Company has adopted new International Financial Reporting Standards
(IFRS) effective January 1, 2013 with retrospective application and
as a result the comparative periods have been restated. 
These condensed consolidated interim financial statements do not
include all of the information required for full annual financial
statements and were approved and authorized for issue by the Audit,
Finance & Risk Committee of the Board of Directors on July 24, 2013. 
2. 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 expenses and
depreciation and amortization for the three and six month periods
ended June 30, 2013 is $544 million (2012 - $424 million) and $1,013
million (2012 - $919 million), respectively. 
3. Property, plant and equipment:  


 
                    Buildings,                                              
                         Plant                                              
                 Installations Plants Under  Oil & Gas                      
                   & Machinery Construction Properties     Other       Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Cost at June 30,                                                            
 2013            $   2,947,580 $    174,375 $   85,685 $  81,385 $ 3,289,025
Accumulated                                                                 
 depreciation at                                                            
 June 30, 2013       1,277,773            -     76,364    32,039   1,386,176
----------------------------------------------------------------------------
Net book value                                                              
 at June 30,                                                                
 2013            $   1,669,807 $    174,375 $    9,321 $  49,346 $ 1,902,849
----------------------------------------------------------------------------
                                                                            
Cost at December                                                            
 31, 2012        $   2,866,013 $     75,238 $   80,368 $  68,906 $ 3,090,525
Accumulated                                                                 
 depreciation at                                                            
 December 31,                                                               
 2012                1,225,202            -     74,151    28,299   1,327,652
----------------------------------------------------------------------------
Net book value                                                              
 at December 31,                                                            
 2012            $   1,640,811 $     75,238 $    6,217 $  40,607 $ 1,762,873
----------------------------------------------------------------------------

 
The Company is relocating two idle Chile facilities to Geismar,
Louisiana with Geismar I expected to start up by the end of 2014 and
Geismar II expected to start up in early 2016. During the three
months ended June 30, 2013, the Company incurred capital expenditures
related to the Geismar projects of $54 million. Remaining capital
expenditures for these projects is estimated to be $850 million,
excluding capitalized interest. 
In addition, under IFRS, certain costs associated with relocating an
asset are not eligible for capitalization and during the three months
ended June 30, 2013, the Company charged $34 million of project
relocation expenses ($22 million after-tax) to income. 
4.Write-off of oil and gas rights 
In New Zealand, the Company partially funded two exploratory
hydrocarbon wells in exchange for the right to purchase any natural
gas discovered. The Company's share of the exploration costs incurred
was $17 million and the Company has no future commitments under this
arrangement. Based on the exploration results to date and the outlook
for natural gas deliveries under this arrangement, the Company has
recorded a non-cash $17 million ($14 million after-tax) charge to
earnings in the second quarter of 2013 to write off the carrying
value of the asset. 
5. Investment in Atlas methanol facility: 
a) The Company has a 63.1% equity interest in Atlas Methanol Company
Unlimited (Atlas). Atlas owns a 1.8 million tonne per year methanol
production facility in Trinidad. Effective January 1, 2013, the
Company accounts for its interest in Atlas using the equity method
(refer to note 12). Summarized financial information of Atlas (100%
basis) is as follows:  


 
                                                     Jun 30          Dec 31 
Summarized Financial Information as at                 2013            2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Cash and cash equivalents                     $      11,731   $      28,883 
Other current assets                                123,890         104,933 
Non-current assets                                  389,400         407,362 
Current liabilities                                 (37,520)        (65,005)
Long-term debt, including current maturities        (68,673)        (80,594)
Other long-term liabilities, including                                      
 current maturities                                (135,477)       (123,801)
----------------------------------------------------------------------------
Net assets at 100%                            $     283,351   $     271,778 
----------------------------------------------------------------------------
                                                                            
Net assets at 63.1%                           $     178,794   $     171,492 
Long-term receivable from Atlas                      13,258          13,173 
----------------------------------------------------------------------------
                                                                            
Investment in associate                       $     192,052   $     184,665 
----------------------------------------------------------------------------
                                                                            
                                                                            
                                   Three Months Ended      Six Months Ended 
                                --------------------------------------------
                                    Jun 30     Jun 30     Jun 30     Jun 30 
Summarized Financial Information      2013       2012       2013       2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Revenue                          $  78,415  $  88,312  $ 163,781  $ 115,196 
Cost of sales and depreciation                                              
 and amortization                  (62,146)   (81,069)  (141,444)  (117,191)
----------------------------------------------------------------------------
Operating income (loss)             16,269      7,243     22,337     (1,995)
Finance costs, finance income                                               
 and other expenses                 (3,451)    (4,056)    (6,872) $  (8,270)
Income tax (expense) recovery       (3,283)    (1,104)    (3,892)       735 
----------------------------------------------------------------------------
Net earnings (loss) at 100%      $   9,535  $   2,083  $  11,573  $  (9,530)
----------------------------------------------------------------------------
Earnings (loss) of associate at                                             
 63.1%                           $   6,017  $   1,315  $   7,303  $  (6,013)
----------------------------------------------------------------------------

 
b) Contingent liability: 
The Board of Inland Revenue of Trinidad and Tobago has issued
assessments against Atlas in respect of the 2005 and 2006 financial
years. All subsequent tax years remain open to assessment. The
assessments relate to the pricing arrangements of certain long-term
fixed price sales contracts that extend to 2014 and 2019 related to
methanol produced by Atlas. The impact of the amounts in dispute for
the 2005 and 2006 financial years is not significant. Atlas has
partial relief from corporation income tax until 2014.  
The Company has lodged objections to the assessments. Based on the
merits of the cases and legal interpretation, management believes its
position should be sustained. 
6. Long-term debt:  


 
                                                       Jun 30        Dec 31 
As at                                                    2013          2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Unsecured notes                                                             
                                                                            
  $350 million at 3.25% due December 15, 2019     $   344,117   $   343,828 
  $250 million at 5.25% due March 1, 2022             246,490       246,326 
  $150 million at 6.00% due August 15, 2015           149,460       149,344 
----------------------------------------------------------------------------
                                                      740,067       739,498 
Egypt limited recourse debt facilities                421,958       438,631 
Other limited recourse debt facilities                 24,541        16,242 
----------------------------------------------------------------------------
Total long-term debt (1)                            1,186,566     1,194,371 
Less current maturities                               (40,444)      (38,290)
----------------------------------------------------------------------------
                                                  $ 1,146,122   $ 1,156,081 
----------------------------------------------------------------------------
                                                                            
(1) Long-term debt is presented net of deferred financing fees.             

 
During the three months ended June 30, 2013, the Company made
repayments on its other limited recourse debt facilities of $1.2
million.  
At June 30, 2013, management believes the Company was in compliance
with all of the covenants and default provisions related to long-term
debt obligations. 
7.Finance costs:  


 
                                     Three Months Ended     Six Months Ended
                                  ------------------------------------------
                                      Jun 30     Jun 30   Jun 30      Jun 30
                                        2013       2012      2013       2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Finance costs                      $  16,278  $  17,590 $  32,796  $   3,623
Less capitalized interest related                                           
 to Geismar plants under                                                    
 construction                         (1,660)         -    (2,727)         -
----------------------------------------------------------------------------
                                   $  14,618  $  17,590 $  30,069  $  33,623
----------------------------------------------------------------------------

 
Finance costs are primarily comprised of interest on borrowings and
finance lease obligations, the effective portion of interest rate
swaps designated as cash flow hedges, amortization of deferred
financing fees, and accretion expense associated with site
restoration costs. Interest during construction is capitalized until
the plant is substantially completed and ready for productive use.  
The Company has interest rate swap contracts on its Egypt limited
recourse debt facilities 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 to March 31, 2015. 
8.Net income per common share: 
Diluted net income per common share is calculated by considering the
potential dilution that would occur if outstanding stock options and,
under certain circumstances, tandem share appreciation rights (TSARs)
were exercised or converted to common shares.  
Outstanding TSARs may be settled in cash or common shares at the
holder's option and for purposes of calculating diluted net income
per common share, the more dilutive of the cash-settled and
equity-settled method is used, regardless of how the plan is
accounted for. Accordingly, TSARs that are accounted for using the
cash-settled method will require adjustments to the numerator and
denominator if the equity-settled method is determined to have a
dilutive effect on diluted net income per common share. 
A reconciliation of the numerator used for the purpose of calculating
diluted net income per common share is as follows:  


 
                                     Three Months Ended     Six Months Ended
                                   -----------------------------------------
                                       Jun 30    Jun 30     Jun 30    Jun 30
                                         2013      2012       2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Numerator for basic net income per                                          
 common share                       $  53,999 $  52,238  $ 114,266 $  74,319
  Adjustment for the effect of                                              
   TSARs:                                                                   
    Cash settled recovery included                                          
     in net income                          -    (2,762)         -         -
    Equity settled expense                  -    (2,021)         -         -
----------------------------------------------------------------------------
                                                                            
Numerator for diluted net income                                            
 per common share                   $  53,999 $  47,455  $ 114,266 $  74,319
----------------------------------------------------------------------------

 
Stock options and, if calculated using the equity-settled method,
TSARs are considered dilutive when the average market price of the
Company's common shares during the period disclosed exceeds the
exercise price of the stock option or TSAR. A reconciliation of the
denominator used for the purposes of calculating basic and diluted
net income per common share is as follows: 


 
                                  Three Months Ended        Six Months Ended
                            ------------------------------------------------
                                  Jun 30      Jun 30      Jun 30      Jun 30
                                    2013        2012        2013        2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Denominator for basic net                                                   
 income per common share      95,116,950  93,781,404  94,817,234  93,445,231
  Effect of dilutive stock                                                  
   options                     1,143,085   1,225,970   1,181,552   1,327,379
  Effect of dilutive TSARs             -     112,590           -           -
----------------------------------------------------------------------------
Denominator for diluted net                                                 
 income per common share      96,260,035  95,119,964  95,998,786  94,772,610
----------------------------------------------------------------------------

 
For the three month and six month periods ended June 30, 2013 and
2012, basic and diluted net income per common share attributable to
Methanex shareholders were as follows: 


 
                                      Three Months Ended    Six Months Ended
                                    ----------------------------------------
                                        Jun 30    Jun 30    Jun 30    Jun 30
                                          2013      2012      2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Basic net income per common share       $ 0.57    $ 0.56    $ 1.21    $ 0.80
Diluted net income per common share     $ 0.56    $ 0.50    $ 1.19    $ 0.78
----------------------------------------------------------------------------

 
9. Share-based compensation: 
a)Share appreciation rights (SARs), tandem share appreciation rights
(TSARs) and stock options: 
(i) Outstanding units: 
Information regarding units outstanding at June 30, 2013 is as
follows: 


 
                                        SARs                  TSARs         
                              ----------------------------------------------
                                             Weighted               Weighted
                                              Average                Average
                               Number of     Exercise   Number of   Exercise
                                   Units        Price       Units      Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Outstanding at December 31,                                                 
 2012                            897,525  $     28.63   1,815,535  $   28.45
  Granted                        360,900        38.24     544,200      38.24
  Exercised                      (67,781)       27.43     (23,400)     27.41
  Cancelled                       (5,500)       30.86           -          -
----------------------------------------------------------------------------
Outstanding at March 31, 2013  1,185,144  $     31.62   2,336,335  $   30.74
----------------------------------------------------------------------------
  Exercised                      (30,395)       26.06      (8,000)     26.88
  Cancelled                            -            -      (2,700)     31.73
----------------------------------------------------------------------------
Outstanding at June 30, 2013   1,154,749  $     31.76   2,325,635  $   30.75
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                          Stock Options     
                                                    ------------------------
                                                                    Weighted
                                                                     Average
                                                     Number of      Exercise
                                                         Units         Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Outstanding at December 31, 2012                     2,982,947   $     19.97
  Granted                                               75,600         38.24
  Exercised                                           (587,689)        22.13
  Cancelled                                            (48,128)        16.13
----------------------------------------------------------------------------
Outstanding at March 31, 2013                        2,422,730   $     20.09
----------------------------------------------------------------------------
  Exercised                                           (430,831)        25.10
----------------------------------------------------------------------------
Outstanding at June 30, 2013                         1,991,899   $     19.01
----------------------------------------------------------------------------
                                                                            
                                                                            
                                  Units Outstanding at  Units Exercisable at
                                         June 30, 2013         June 30, 2013
                     -------------------------------------------------------
                        Weighted                                            
                         Average                                            
                       Remaining              Weighted              Weighted
                     Contractual   Number of   Average   Number of   Average
Range of Exercise           Life       Units  Exercise       Units  Exercise
 Prices                  (Years) Outstanding     Price Exercisable     Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
SARs:                                                                       
  $23.36 to 29.18            4.2     474,049 $   26.86     377,405 $   26.43
  $31.73 to 38.24            6.2     680,700     35.18      97,740     31.73
----------------------------------------------------------------------------
                             5.4   1,154,749 $   31.76     475,145 $   27.52
----------------------------------------------------------------------------
                                                                            
TSARs:                                                                      
  $23.36 to 29.18            4.1   1,149,145 $   26.66     982,131 $   26.30
  $31.73 to 38.24            6.1   1,176,490     34.74     208,460     31.73
----------------------------------------------------------------------------
                             5.1   2,325,635 $   30.75   1,190,591 $   27.25
----------------------------------------------------------------------------
Stock options:                                                              
  $6.33 to 11.56             2.7     830,290 $    6.39     830,290 $    6.39
  $20.76 to 38.24            2.2   1,161,609     28.02   1,008,959     27.04
----------------------------------------------------------------------------
                             2.4   1,991,899 $   19.01   1,839,249 $   17.72
----------------------------------------------------------------------------

 
(ii) Compensation expense related to SARs and TSARs: 
Compensation expense for SARs and TSARs is measured based on their
fair value and is recognized over the vesting period. Changes in fair
value each period are recognized in net income for the proportion of
the service that has been rendered at each reporting date. The fair
value at June 30, 2013 was $47.7 million compared with the recorded
liability of $38.4 million. The difference between the fair value and
the recorded liability of $9.3 million will be recognized over the
weighted average remaining vesting period of approximately 1.8 years.
The weighted average fair value was estimated at June 30, 2013 using
the Black-Scholes option pricing model. 
For the three and six month periods ended June 30, 2013, compensation
expense related to SARs and TSARs included an expense in cost of
sales and operating expenses of $6.9 million (2012 - recovery of $3.6
million) and an expense of $23.9 million (2012 - expense of $7.1
million), respectively. This included an expense of $4.1 million
(2012 - recovery of $6.4 million) and an expense of $19.1 million
(2012 - expense of $1.4 million) related to the effect of the change
in the Company's share price for the three and six month periods
ended June 30, 2013.  
(iii) Compensation expense related to stock options: 
For the three and six month periods ended June 30, 2013, compensation
expense related to stock options included in cost of sales and
operating expenses was $0.2 million (2012 - $0.2 million) and $0.4
million (2012 - $0.4 million), respectively. The fair value of each
stock option grant was estimated on the date of grant using the
Black-Scholes option pricing model. 
b)Deferred, restricted and performance share units: 
Deferred, restricted and performance share units outstanding at June
30, 2013 are as follows: 


 
                                         Number of    Number of   Number of 
                                          Deferred   Restricted Performance 
                                       Share Units  Share Units Share Units 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Outstanding at December 31, 2012           566,850       38,883   1,053,869 
  Granted                                    9,725       22,500     304,600 
  Granted in-lieu of dividends               2,391          280       4,305 
  Redeemed                                 (49,432)           -    (410,177)
  Cancelled                                      -            -      (5,810)
----------------------------------------------------------------------------
Outstanding at March 31, 2013              529,534       61,663     946,787 
----------------------------------------------------------------------------
  Granted                                      397            -           - 
  Granted in-lieu of dividends               2,469          293       4,483 
  Cancelled                                      -            -      (1,880)
----------------------------------------------------------------------------
Outstanding at June 30, 2013               532,400       61,956     949,390 
----------------------------------------------------------------------------

 
Compensation expense for deferred, restricted and performance share
units is measured at fair value based on the market value of the
Company's common shares and is recognized over the vesting period.
Changes in fair value are recognized in net income 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
June 30, 2013 was $73.7 million compared with the recorded liability
of $57.0 million. The difference between the fair value and the
recorded liability of $16.7 million will be recognized over the
weighted average remaining vesting period of approximately 2.0 years. 
For the three and six month periods ended June 30, 2013, compensation
expense related to deferred, restricted and performance share units
included in cost of sales and operating expenses was an expense of
$8.6 million (2012 - recovery of $0.1 million) and an expense of
$27.7 million (2012 - expense of $14.0 million), respectively. This
included an expense of $5.2 million (2012 - recovery of $4.1 million)
and an expense of $20.9 million (2012 - expense of $6.2 million)
related to the effect of the change in the Company's share price for
the three and six month periods ended June 30, 2013.  
10. Changes in non-cash working capital:  
Changes in non-cash working capital for the three and six month
periods ended June 30, 2013 were as follows: 


 
                                   Three Months Ended      Six Months Ended 
                                --------------------------------------------
                                    Jun 30     Jun 30     Jun 30     Jun 30 
                                      2013       2012       2013       2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Decrease (increase) in non-cash                                             
 working capital:                                                           
  Trade and other receivables    $ (35,677) $ (15,749) $ (60,105) $ (16,690)
  Inventories                       18,531     11,702    (14,596)    25,065 
  Prepaid expenses                  (9,531)    (9,707)    (5,640)    (8,786)
  Trade, other payables and                                                 
   accrued liabilities,                                                     
   including long-term payables                                             
   included in other long-term                                              
   liabilities                      49,264     35,489     86,972    (21,287)
----------------------------------------------------------------------------
                                    22,587     21,735      6,631    (21,698)
Adjustments for items not having                                            
 a cash effect and working                                                  
 capital changes relating to                                                
 taxes and interest paid           (24,961)   (17,709)   (25,338)    (1,638)
----------------------------------------------------------------------------
Changes in non-cash working                                                 
 capital having a cash effect    $  (2,374) $   4,026  $ (18,707) $ (23,336)
----------------------------------------------------------------------------
                                                                            
These changes relate to the                                                 
 following activities:                                                      
  Operating                      $  (3,986) $  18,173  $ (19,023) $ (22,021)
  Investing                          1,612    (14,147)       316     (1,315)
----------------------------------------------------------------------------
Changes in non-cash working                                                 
 capital                         $  (2,374) $   4,026  $ (18,707) $ (23,336)
----------------------------------------------------------------------------

 
11. Financial instruments: 
Financial instruments are either measured at amortized cost or fair
value. Held-to-maturity investments, loans and receivables and other
financial liabilities are measured at amortized cost.
Held-for-trading financial assets and liabilities and
available-for-sale financial assets are measured on the Consolidated
Statements of Financial Position at fair value. Derivative financial
instruments are classified as held-for-trading and are recorded on
the Consolidated Statements of Financial Position at fair value
unless exempted. Changes in fair value of held-for-trading derivative
financial instruments are recorded in earnings unless the instruments
are designated as cash flow hedges.  
The euro hedges, Egypt interest rate swaps, and New Zealand dollar
hedges designated as cash flow hedges are measured at fair value
based on industry-accepted valuation models and inputs obtained from
active markets. 
The Egypt limited recourse debt facilities bear interest at LIBOR
plus a spread. The Company has 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 to March 31, 2015. The
Company has designated these interest rate swaps as cash flow hedges.
These interest rate swaps had an outstanding notional amount of $329
million as at June 30, 2013. The notional amount decreases over the
expected repayment period. At June 30, 2013, these interest rate swap
contracts had a negative fair value of $26.0 million (2012 - $36.8
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 and buy New Zealand dollar at a fixed USD
exchange rate. At June 30, 2013, the Company had outstanding forward
exchange contracts designated as cash flow hedges to sell a notional
amount of EUR5.7 million and buy a notional amount of NZD $119.1
million in exchange for US dollars. The euro contracts had a positive
fair value of $0.1 million (December 31, 2012 - negative fair value
of $0.2 million) recorded in other assets and the New Zealand dollar
contracts had a negative fair value of $4.3 million (December 31,
2012 - nil) recorded in current liabilities. Changes in fair value of
derivative financial instruments designated as cash flow hedges have
been recorded in other comprehensive income. 
The carrying values of the Company's financial instruments
approximate their fair values, except as follows: 


 
                                                         June 30, 2013      
                                                  --------------------------
                                                       Carrying             
As at                                                     Value   Fair Value
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Long-term debt                                      $ 1,203,300  $ 1,210,149
----------------------------------------------------------------------------

 
There is no publicly traded market for the limited recourse debt
facilities, the fair value of which is estimated by reference to
current market prices for debt securities with similar terms and
characteristics. The fair value of the unsecured notes was calculated
by reference to a limited number of small transactions in June 2013.
The fair value of the Company's unsecured notes will fluctuate until
maturity. 
12. Adoption of New Accounting Standards: 
a) Effective January 1, 2013, the Company has adopted the following
new IASB accounting standards related to consolidation and joint
arrangements: IFRS 10, Consolidated Financial Statements; IFRS 11,
Joint Arrangements; and IFRS 12, Disclosure of Interests in Other
Entities. 
As a result of the adoption of these new standards, the Company's
63.1% interest in the Atlas entity is accounted for using the equity
method. The Company has restated its Consolidated Statement of
Financial Position as at January 1, 2012 and December 31, 2012 and
its Consolidated Statement of Income and Comprehensive Income for the
three and six months ended June 30, 2012. Reconciliations of the
restatements of the Consolidated Statement of Financial Position as
at December 31, 2012 and Consolidated Statement of Income and
Comprehensive Income for the three and six months ended June 30, 2012
are as follows:  


 
Consolidated Statement of Financial Position                                
As at December 31, 2012                                                     
                                                                            
                                                  Restatement               
                                  As Previously   of Atlas to               
                                         Stated Equity Method   As Adjusted 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents         $   745,610   $   (18,225)  $   727,385 
  Trade and other receivables           429,203       (12,047)      417,156 
  Inventories                           253,023         3,317       256,340 
  Prepaid expenses                       28,314        (2,726)       25,588 
----------------------------------------------------------------------------
                                      1,456,150       (29,681)    1,426,469 
Non-current assets:                                                         
  Property, plant and equipment       2,014,748      (251,875)    1,762,873 
  Investment in associate                     -       184,665       184,665 
  Other assets                           73,724        (5,170)       68,554 
----------------------------------------------------------------------------
                                      2,088,472       (72,380)    2,016,092 
----------------------------------------------------------------------------
                                    $ 3,544,622   $  (102,061)  $ 3,442,561 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Trade, other payables and                                                 
   accrued liabilities              $   353,744   $    23,922   $   377,666 
  Current maturities on long-term                                           
   debt                                  53,334       (15,044)       38,290 
  Current maturities on other                                               
   long-term liabilities                 33,903        (3,581)       30,322 
----------------------------------------------------------------------------
                                        440,981         5,297       446,278 
Non-current liabilities:                                                    
  Long-term debt                      1,191,891       (35,810)    1,156,081 
  Other long-term liabilities           242,435       (42,223)      200,212 
  Deferred income tax liabilities       191,578       (29,325)      162,253 
----------------------------------------------------------------------------
                                      1,625,904      (107,358)    1,518,546 
Equity:                                                                     
  Capital stock                         481,779             -       481,779 
  Contributed surplus                    15,481             -        15,481 
  Retained earnings                     805,661             -       805,661 
  Accumulated other comprehensive                                           
   loss                                 (13,045)            -       (13,045)
----------------------------------------------------------------------------
  Shareholders' equity                1,289,876             -     1,289,876 
  Non-controlling interests             187,861             -       187,861 
----------------------------------------------------------------------------
  Total equity                        1,477,737             -     1,477,737 
----------------------------------------------------------------------------
                                    $ 3,544,622   $  (102,061)  $ 3,442,561 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Consolidated Statement of Income and Comprehensive Income                   
Three months ended June 30, 2012                                            
                                                                            
                                                 Restatement of             
                                  As Previously Atlas to Equity             
                                         Stated          Method As Adjusted 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue                            $    656,103  $      (42,320) $  613,783 
Cost of sales and operating                                                 
 expenses                              (506,769)         31,877    (474,892)
Depreciation and amortization           (44,436)          5,872     (38,564)
Geismar project relocation                                                  
 expenses                                (3,686)              -      (3,686)
----------------------------------------------------------------------------
Operating income                        101,212          (4,571)     96,641 
Earnings of associate                         -           1,315       1,315 
Finance costs                           (20,137)          2,547     (17,590)
Finance income and other expenses          (293)             12        (281)
----------------------------------------------------------------------------
Income before income tax expense         80,782            (697)     80,085 
Income tax expense:                                           -             
  Current                               (10,589)           (264)    (10,853)
  Deferred                               (4,048)            961      (3,087)
----------------------------------------------------------------------------
                                        (14,637)            697     (13,940)
----------------------------------------------------------------------------
Net income                         $     66,145  $            -  $   66,145 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Change in fair value of forward                                             
 exchange contracts, net of tax            (566)              -        (566)
Change in fair value of interest                                            
 rate swap contracts, net of tax           (747)              -        (747)
Realized loss on interest rate                                              
 swap reclassified to interest                                              
 expense, net of tax                      2,766               -       2,766 
----------------------------------------------------------------------------
Comprehensive income               $     67,598  $            -  $   67,598 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:                                              -             
  Methanex Corporation                                                      
   shareholders                          52,883               -      52,883 
  Non-controlling interests              14,715               -      14,715 
----------------------------------------------------------------------------
                                   $     67,598  $            -  $   67,598 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Consolidated Statement of Income and Comprehensive Income                   
Six months ended June 30, 2012                                              
                                                                            
                                                Restatement of              
                                 As Previously Atlas to Equity              
                                        Stated          Method   As Adjusted
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue                          $   1,321,970 $      (54,649) $   1,267,321
Cost of sales and operating                                                 
 expenses                          (1,075,326)          47,470   (1,027,856)
Depreciation and amortization         (82,403)           8,438      (73,965)
Geismar project relocation                                                  
 expenses                              (3,686)               -       (3,686)
----------------------------------------------------------------------------
Operating income                       160,555           1,259       161,814
Earnings of associate                        -         (6,013)       (6,013)
Finance costs                         (38,670)           5,047      (33,623)
Finance income and other                                                    
 expenses                                1,386             171         1,557
----------------------------------------------------------------------------
Income before income tax expense       123,271             464       123,735
Income tax expense:                                                         
  Current                             (15,157)           (993)      (16,150)
  Deferred                             (9,158)             529       (8,629)
----------------------------------------------------------------------------
                                      (24,315)           (464)      (24,779)
----------------------------------------------------------------------------
Net income                       $      98,956 $             - $      98,956
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Change in fair value of forward                                             
 exchange contracts, net of tax          (871)               -         (871)
Change in fair value of interest                                            
 rate swap contracts, net of tax       (3,360)               -       (3,360)
Realized loss on interest rate                                              
 swap reclassified to interest                                              
 expense, net of tax                     5,702               -         5,702
----------------------------------------------------------------------------
Comprehensive income             $     100,427 $             - $     100,427
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Attributable to:                                                            
  Methanex Corporation                                                      
   shareholders                         74,853               -        74,853
  Non-controlling interests             25,574               -        25,574
----------------------------------------------------------------------------
                                 $     100,427 $             - $     100,427
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
b) Effective January 1, 2013, the Company adopted IFRS 13, Fair Value
Measurements. As a result of this new standard, incremental
disclosures have been provided in note 11 to these condensed
consolidated interim financial statements. 
c) Effective January 1, 2013, the Company adopted the revised IFRS
19, Employee Benefits. The adoption of this standard has not had a
significant impact on the Company. 
d) Effective January 1, 2013, the Company adopted the revised IAS,
Presentation of Financial Statements. The adoption of this standard
has resulted in a change to the presentation of the Company's
Consolidated Statements of Comprehensive Income. 


 
Methanex Corporation                                                        
Quarterly History (unaudited)                                               
                                                                            
                                                                            
                                                                            
                            YTD 2013 Q2 2013 Q1 2013    2012      Q4      Q3
----------------------------------------------------------------------------
                                                                            
METHANOL SALES VOLUMES                                                      
(thousands of tonnes)                                                       
                                                                            
Methanex-produced              2,045   1,021   1,024   4,039   1,059   1,053
Purchased methanol             1,337     749     588   2,552     651     641
Commission sales (1)             461     242     219     855     176     205
----------------------------------------------------------------------------
                                                                            
                               3,843   2,012   1,831   7,446   1,886   1,899
----------------------------------------------------------------------------
                                                                            
METHANOL PRODUCTION                                                         
(thousands of tonnes)                                                       
                                                                            
New Zealand                      670     361     309   1,108     378     346
Atlas, Trinidad (63.1%)          449     201     248     826     180     255
Titan, Trinidad                  350     169     181     786     189     186
Egypt (60%)                      296     163     133     557     129      62
Medicine Hat                     260     129     131     481     132     117
Chile                             67      12      55     313      59      59
----------------------------------------------------------------------------
                                                                            
                               2,092   1,035   1,057   4,071   1,067   1,025
----------------------------------------------------------------------------
                                                                            
AVERAGE REALIZED METHANOL                                                   
 PRICE (2)                                                                  
  ($/tonne)                      418     425     412     382     389     373
  ($/gallon)                    1.26    1.28    1.24    1.15    1.17    1.12
                                                                            
PER SHARE INFORMATION ($ per share)                                         
 (3)                                                                        
Basic net income (loss)         1.21    0.57    0.64  (0.73)  (1.49)  (0.03)
Diluted net income (loss)       1.19    0.56    0.63  (0.73)  (1.49)  (0.03)
Adjusted net income (4)         1.94    1.02    0.92    1.90    0.64    0.38
----------------------------------------------------------------------------
 
                                                                            
                                                                            
                                Q2     Q1   2011     Q4     Q3     Q2     Q1
----------------------------------------------------------------------------
                                                                            
METHANOL SALES VOLUMES                                                      
(thousands of tonnes)                                                       
                                                                            
Methanex-produced            1,001    926  3,853  1,052    983    970    848
Purchased methanol             569    691  2,815    644    672    664    835
Commission sales (1)           276    198    846    208    235    231    172
----------------------------------------------------------------------------
                                                                            
                             1,846  1,815  7,514  1,904  1,890  1,865  1,855
----------------------------------------------------------------------------
                                                                            
METHANOL PRODUCTION                                                         
(thousands of tonnes)                                                       
                                                                            
New Zealand                    210    174    830    211    209    207    203
Atlas, Trinidad (63.1%)        264    127    891    195    170    263    263
Titan, Trinidad                196    215    711    180    224    186    121
Egypt (60%)                    164    202    532    132    191    178     31
Medicine Hat                   118    114    329    130    125     74      -
Chile                           82    113    554    113    116    142    183
----------------------------------------------------------------------------
                                                                            
                             1,034    945  3,847    961  1,035  1,050    801
----------------------------------------------------------------------------
                                                                            
AVERAGE REALIZED METHANOL                                                   
 PRICE (2)                                                                  
  ($/tonne)                    384    382    374    388    377    363    367
  ($/gallon)                  1.15   1.15   1.12   1.17   1.13   1.09   1.10
                                                                            
PER SHARE INFORMATION ($                                                    
 per share) (3)                                                             
Basic net income (loss)       0.56   0.24   2.16   0.69   0.67   0.44   0.37
Diluted net income (loss)     0.50   0.23   2.06   0.68   0.59   0.43   0.37
Adjusted net income (4)       0.47   0.41   1.93   0.69   0.43   0.41   0.39
----------------------------------------------------------------------------
                                                                            
(1) Commission sales represent volumes marketed on a commission basis       
related to the 36.9% of the Atlas methanol facility and 40% of the Egypt    
methanol facility that we do not own.                                       
(2) Average realized price is calculated as revenue, excluding commissions  
earned and the Egypt non-controlling interest share of revenue but including
an amount representing our share of Atlas revenue, divided by the total     
sales volumes of Methanex-produced (attributable to Methanex shareholders)  
and purchased methanol.                                                     
(3) Per share information calculated using amounts attributable to Methanex 
shareholders.                                                               
(4) This item is a non-GAAP measure that does not have any standardized     
meaning prescribed by GAAP and therefore is unlikely to be comparable to    
similar measures presented by other companies. Refer to the Additional      
Information - Supplemental Non-GAAP Measures section for a description of   
the non-GAAP measure and reconciliation to the most comparable GAAP measure.

 
Contacts:
Methanex Corporation
Sandra Daycock
Director, Investor Relations
604.661.2600
invest@methanex.com
www.methanex.com
 
 
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