Tembec reports quarterly net loss of $17 million

Tembec has reported a net loss of $17 million or $0.17 per share of its last quarter, compared to a net loss of $4 million or $0.04 per share in the September 2008 quarter.

For the fiscal year ended September 26, 2009, sales were $1.8 billion as compared to $2.4 billion in the comparative 12-month period. The Company generated a net loss of $214 million or $2.14 per share compared to a net loss of $102 million or $1.19 per share in the five-month period ended February 29, 2008 and a net loss of $48 million or $0.48 per share in the seven-month period ended September 27, 2008.

Tembec's Outlook:

While the September quarterly operating results were an improvement over June, they remained relatively poor. The strengthening Canadian $, the deterioration in the newsprint market and weak lumber markets all combined to negatively impact financial performance.

In response, the Company continued with selective production curtailments to manage and reduce inventories. This was a key factor in the Company’s ability to improve its liquidity to $170 million. Looking ahead, lumber markets will remain challenging.

Pulp markets are improving with continued production curtailments and good demand from China providing the impetus. While newsprint prices decreased in the September quarter, price increases are now being implemented, albeit from very low levels.

The segment will continue to be under pressure as producers curtail production in the wake of continuously declining demand. The economy and general business conditions have slowly improved and the trend is expected to continue.

However, the magnitude of the decline experienced earlier in the year will require several more quarters before we see a more robust economic recovery. Given this and the volatility of the US $ and product prices, the Company has placed a major emphasis on activities to maintain and enhance liquidity. A number of initiatives have been launched with the target to raise a further $73 million over the next 12 months. Certain additional initiatives are also under evaluation at this time.

Read more: Tembec reports financial results for its fourth quarter and year ended September 26, 2009 (Tembec)