Tembec Q4 results ‘better than anticipated’
November 21, 2014, Montreal, Que. – Tembec posted positive results in its fourth quarter financial results, with improved consolidated sales over the same quarter in 2013.
Consolidated sales for the three-month period ended September 27, 2014, were $371 million, as compared to $352 million in the same quarter a year ago. The Company generated net earnings of $5 million or $0.05 per share in the September 2014 quarter compared to net earnings of $14 million or $0.14 per share in the September 2013 quarter. Operating earnings before depreciation, amortization and other items (adjusted EBITDA) was $29 million for the three-month period ended September 27, 2014, as compared to adjusted EBITDA of $24 million a year ago and adjusted EBITDA of $30 million in the prior quarter.
Overall, the September 2014 quarterly results were better than anticipated. Higher lumber prices accounted for a significant portion of the outperformance. The Specialty Cellulose segment results were as expected. The recovery in specialty grade volumes has been relatively slow, increasing by approximately 4% year-over-year. The Company has had to place greater reliance on the less profitable viscose grade market, which is negatively impacting segment results. Similar market conditions are expected in the coming quarter. The improved results in the Forest Products segment were driven by higher prices for lumber. Stud lumber prices increased by a larger margin, closing the gap with random lumber. We anticipate seasonally weaker prices in the coming quarter. The Paper Pulp segment results declined as a result of lower high-yield pulp prices. The new South American hardwood paper pulp capacity is impacting prices and we anticipate marginal profitability from this segment until the market absorbs this new capacity. The Paper segment results were relatively unchanged. The coated bleached board market is stable, but the export market for newsprint, on which North American producers are placing greater reliance, is under pressure.
The Company is looking forward to completing the construction of the Temiscaming, QC, specialty cellulose Cogen project in the coming quarter. While the total estimated cost has increased, the project remains a critical element that will materially improve the mill's cost structure and margins. The Company has placed significant emphasis on training and commissioning in order to ensure a successful start-up of the boiler and turbine.