Tembec's forest products segment fell into the red during its fiscal third quarter with a C$20 million (US$20.7 million) operating loss after posting a C$2 million (US$2.1 million) operating profit during the same period a year ago, the company announced today. The segment's sales fell 10% to C$113 million (US$116.7 million).
The Montreal-based company's forest products segment also generated a negative EBITDA, which Tembec defines as operating earnings before depreciation, amortization and other specific or non-recurring items, of C$16 million (US$16.5 million). The company incurred C$3 million (US$3.1 million) of lumber export taxes during the quarter.
In a statement accompanying the results, the company cited lower prices for wood and weak demand for SPF lumber as the main culprits behind the poor performance. A strong Canadian dollar also contributed to reduced prices.
During the quarter, U.S. dollar reference prices for random lumber decreased by approximately US$52 per million board feet (mbf) on average and stud lumber decreased by US$14 per mbf.
Overall, Tembec, which also produces paper and pulp products, saw operating earnings fall 45% to C$31 million (US$32 million), as sales fell 18% to C$448 million (US$462.8 million). EBITDA for the quarter was C$32 million (US$33.1 million), a 47% decline from the same period last year.
"While we are seeing some recovery in prices and high lumber futures pricing, it is occurring from very low levels," the company said in its statement. "Results for the segment will remain below acceptable levels until U.S. housing starts recover."