MONTREAL - Tembec cut its first-quarter net loss by more than a third to $10 million in the first quarter, despite a six per cent drop in sales, as it reduced a number of costs and prepared to sell a pulp mill in British Columbia.
The Montreal-based company said it lost 10 cents per share for the period ended Dec. 29, compared to a 16 cents per share loss in the prior year. Adjusting for one-time items, it lost five cents per share.
Tembec (TSX:TMB) said the results were in line with its expectations, but analysts had expected a $3 million loss on $373 million of sales, according to analysts polled by Thomson Reuters.
Revenues fell $25 million to $376 million and adjusted pre-tax operating income (EBITDA) was $19 million, up from $12 million in the 2012 quarter, but down from $23 million in the prior quarter.
The company says it expects to sell the Skookumchuck pulp mill in the coming year.
Paul Quinn of RBC Capital Markets expects the sale could generate up to $135 million, which could accelerate capital spending plans at its lumber operations and help fund the boiler and turbine upgrade in Temiscaming, Que.
The turbine upgrade appears to be on hold pending successful contract negotiations, he added in a research note.
Tembec's specialty cellulose pulp segment generated $18 million of income on $103 million of sales, a drop from the fourth quarter due to lower shipments of specialty and viscose grades cause in part by the annual maintenance shutdown at its mill in Temiscaming, Que, which lasted 10 days.
Its paper segment earned $6 million on $78 million of sales, also a decrease from the prior quarter on lower coated bleached board and newsprint shipments.
The lumber segment made $2 million on $101 million of sales. Lower shipments of lumber and sawmill by-products were responsible for a $7 million drop in sales.
The paper pulp segment generated no adjusted earnings on $117 million of sales, compared to an $18 million adjusted EBITDA loss on $140 million of sales in the fourth quarter. The lower sales was due primarily to the idling of its Chetwynd high-yield pulp mill in British Columbia.