Tembec’s Q2 losses double to $26M; Temiscaming costs up

Company says the cost to upgrade its specialty cellulose mill in Quebec has jumped by 24%.

MONTREAL – Tembec says its net loss nearly doubled to $26 million in its most recent quarter, blaming flat revenues.

Sales, however, were unchanged, totaling $407 million.

Included in the results was a $22-million non-cash impairment charge for a BC pulp mill up for sale.

Adjusting for one-time items, RBC analyst Paul Quinn said Tembec earned $3 million. Analysts had on average expected the company to break even.

Tembec has also announced a nearly 24% increase in the cost of the upgrade to its specialty cellulose mill in Temiscaming, Que.

The project will cost $235 million, up from $190 million when the project was announced in March 2012. The company has already spent $94 million on the project.

The replacement of three low-pressure boilers with a single boiler to burn waste sulphite liquor generated in the cellulose manufacturing process is slated to be completed in September 2014.

The company said the increased cost stemmed mainly from its decision to buy a larger boiler. The financial benefits of the project have also been increased by $6 million to $48 million.

The company said its specialty cellulose pulp segment’s performance was weaker in the quarter, earning $14 million on $120 million of sales, half the adjusted earnings before interest, taxes, depreciation and amoritization of a year ago on a 10% drop in sales.

The lumber and paper pulp businesses reversed last year’s combined $24 million in adjusted EBITDA losses.

Lumber earned $7 million, while paper pulp earned $4 million on $104 million and $122 million of revenues respectively.

Paper segment earnings increased by $1 million to reach $5 million on a 6.3% increase in revenues to $87 million.

©The Canadian Press