Tembec warns of lumber production downtime

MONTREAL — Canadian lumber workers could face even more downtime in the coming weeks as producers grapple with declining prices and the strong dollar, Tembec’s chief executive warned Wednesday.

MONTREAL — Canadian lumber workers could face even more downtime in the coming weeks as producers grapple with declining prices and the strong dollar, Tembec’s chief executive warned Wednesday.

“If you don’t see a big change in the marketplace sometime in the next four to six weeks, you may see some additional downtime from Tembec and likely others too,” James Lopez said during a conference call.

China’s demand has helped to minimize lumber price reductions in recent months. But selling prices have decreased as North American orders have been hurt by poor weather and the ongoing weakness of the U.S. housing market.

Tembec’s lumber operations remained in the red, but losses decreased slightly from last quarter to $9 million while sales grew to $124 million.

About 59 per cent of its mills were active in the quarter, an increase from the prior period.

“At best we can say that the housing starts are going sideways,” Lopez told analysts.

While no one expected a large recovery, Lopez said there was hope that a modest recovery would germinate in 2011 and carry through 2012 and 2013.

But the seasonal pickup in demand failed to materialize, in part due to poor spring weather in Canada and the United States.

“What we’ve seen is a very, very tepid start to the construction season.”

The Quebec-based company earned $7 million in the second quarter after a breakeven period a year earlier.

Tembec (TSX:TMB) earned seven cents per share for the period, compared to nil in the same period of 2010. Sales declined to $452 million from $476 million.

Analysts had expected 22 cents of earnings for the quarter, with $454 million of sales, according to those polled by Thomson Reuters.

Operating earnings, stripping out one-time items, came in at $33 million, up slightly from $32 million a year earlier but up sharply from $11 million in the prior quarter.

“Our results in the quarter were pretty much as we expected with the currency clawing away some of the EBITDA but still a strong recovery from the previous quarter,” Lopez added.

A large chunk of the earnings came from strong results of its dissolving chemical pulp business, which continues to enjoy strong prices and demand.

The sector’s earnings increased by $25 million from the previous quarter to $44 million. Segment profits also increased from $37 million last year because of higher contract pricing and lower costs and maintenance.

“We anticipate that our dissolving pulp business will continue to be robust,” Lopez said.

Lower energy costs at its Kapuskasing newsprint mill and increased energy sales caused its paper segment profit to double to $9 million from last quarter and up from a $5 million loss a year ago.

And with its major annual maintenance completed and stronger markets and prices expected, Tembec anticipates several strong quarters ahead overall.

Paul Quinn of RBC Capital Markets said Tembec delivered “solid” results that were essentially in line with his expectations.

Tembec is an integrated forest products company, with operations in North America and France. It has some 6,000 employees, and operates more than 30 market pulp, paper and wood product manufacturing units, and produces silvichemicals from by-products of its pulping process and specialty chemicals.

Tembec markets its products worldwide and has sales offices in Canada, the United States, China, Korea and Japan.

It was created in 1973 after a closed paper mill in Temiscaming, Que., was purchased from a large multinational company.

On the Toronto Stock Exchange, its shares gained 35 cents, or 6.57 per cent, to close at $5.68 on Wednesday.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The QEII was closed Sunday morning due to a pole fire. (Photo courtesy City of Red Deer)
UPDATE: QEII near Red Deer reopens

The QEII has been reopened after being closed due to a pole… Continue reading

Innisfail RCMP are investigating a single-vehicle crash that happened west of Bowden on March 21, 2021. (File photo by Advocate staff)
Bashaw RCMP investigate fatal collision in central Alberta

Bashaw RCMP are investigating after a fatal collision Saturday afternoon. Police were… Continue reading

A damaged unicorn statue is shown in a field outside of Delia, Alta. in this undated handout photo. It's not often police can report that a unicorn has been found, but it was the truth Saturday when RCMP said a stolen, stainless-steel statue of the mythical beast had been located in a field not far from where he'd been taken. THE CANADIAN PRESS/HO, RCMP *MANDATORY CREDIT*
Mounties get their unicorn; stolen statue of mythical beast found in Alberta field

DELIA, Alta. — It’s not often police can report that a unicorn… Continue reading

Red Deer Rebels forward Ethan Rowland battles with Medicine Hat Tigers forward Brett Kemp during WHL action at the Centrium Saturday night. (Photo by ROB WALLATOR/Red Deer Rebels)
Tigers claw back, hand Rebels 11th straight loss

Tigers 5 Rebels 2 The same old issues continue to plague the… Continue reading

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
Red Deer Public Schools will not pilot the new draft curriculum at its elementary schools. (File photo contributed by Red Deer Public Schools)
UPDATED: Red Deer Public Schools says no to piloting new curriculum

Alberta Teachers’ Association support school boards

People are shown at a COVID-19 vaccination site in Montreal, Sunday, April 18, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Federal government to send health-care workers to Ontario, Trudeau says

MONTREAL — Prime Minister Justin Trudeau says federal departments and some Canadian… Continue reading

People cross a busy street in the shopping district of Flushing on Tuesday, March 30, 2021, in the Queens borough of New York. Access to the COVID-19 vaccine in the United States is growing by the day. THE CANADIAN PRESS/AP-Kathy Willens
Despite COVID-19 vaccines, Americans in D.C. not feeling celebratory — or charitable

WASHINGTON — This might make Canadians jealous of their American cousins for… Continue reading

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, speaks during a press briefing at the White House, Tuesday, April 13, 2021, in Washington. (AP Photo/Patrick Semansky)
Half of U.S. adults have received at least one COVID-19 shot

WASHINGTON — Half of all adults in the U.S. have received at… Continue reading

A man pays his respects at a roadside memorial in Portapique, N.S. on Thursday, April 23, 2021. RCMP say at least 22 people are dead after a man who at one point wore a police uniform and drove a mock-up cruiser, went on a murder rampage in Portapique and several other Nova Scotia communities. THE CANADIAN PRESS/Andrew Vaughan
Memorial service in Nova Scotia marks one year since mass shooting started

TRURO, N.S. — A memorial service is planned for today in central… Continue reading

In this April 23, 2016, photo, David Goethel sorts cod and haddock while fishing off the coast of New Hampshire. To Goethel, cod represents his identity, his ticket to middle class life, and his link to one the country's most historic industries, a fisherman who has caught New England's most recognized fish for more than 30 years. (AP Photo/Robert F. Bukaty)
‘It’s more than just a fish:’ Scientists worry cod will never come back in N.L.

ST. JOHN’S, N.L. — The latest assessment of Atlantic cod stocks, whose… Continue reading

FILE - In this Friday Aug. 21, 2020 file photo, Leonid Volkov, a top strategist for Russian opposition leader Alexei Navalny, addresses the media in Berlin, Germany. Activists for imprisoned Russian opposition leader Alexei Navalny are calling for massive protests in the heart of Moscow and St. Petersburg as Navalny's health reportedly is deteriorating severely while on hunger strike. Leonid Volkov, a top strategist for Navalny, said the demonstrations are called on short notice for Wednesday April 21, 2021, because "his life hangs in the balance. ... We don't know how long he can hold on." (AP Photo/Michael Sohn, File)
Navalny’s team calls protests amid reports of failing health

MOSCOW — Associates of imprisoned Russian opposition leader Alexei Navalny called Sunday… Continue reading

Florida Gov. Ron DeSantis gestures during a news conference Sunday, April 4, 2021, at the Manatee County Emergency Management office in Palmetto, Fla. DeSantis has received a single-dose coronavirus vaccine. His office confirmed Wednesday, April 7, 2021 that the Republican governor got the Johnson & Johnson vaccine, which requires only a single dose. (AP Photo/Chris O'Meara, file)
GOP White House hopefuls move forward as Trump considers run

WASHINGTON — Less than three months after former President Donald Trump left… Continue reading

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Most Read