Tembec reports financial results for its fourth fiscal quarter ended September 24, 2016

Consolidated sales for the three-month period ended September 24, 2016, were $389 million, as compared to $373 million in the same quarter a year ago. The Company generated net earnings of $12 million or $0.12 per share in the September 2016 quarter compared to a net loss of $32 million or $0.32 per share in the September 2015 quarter. Operating earnings before depreciation, amortization and other items (adjusted EBITDA) was $57 million for the three-month period ended September 24, 2016, as compared to adjusted EBITDA of $36 million a year ago and adjusted EBITDA of $26 million in the prior quarter.

For the fiscal year ended September 24, 2016, consolidated sales were $1.5 billion as compared to $1.4 billion in the prior year. The Company generated net earnings of $20 million or $0.20 per share compared to a net loss of $150 million or $1.50 per share in fiscal 2015. The prior year loss included a non-cash loss of $81 million related to the translation of US dollar denominated debt. Adjusted EBITDA was $148 million compared to $70 million in the prior year. Operating earnings increased from $31 million to $99 million.

The Specialty Cellulose Pulp segment generated adjusted EBITDA of $23 million on sales of $122 million for the quarter ended September 24, 2016, compared to adjusted EBITDA of $10 million on sales of $111 million in the June 2016 quarter. The pulp sales increased by $12 million due to higher shipments and prices. Canadian dollar selling prices for specialty grades improved by $30 per tonne. The increase was currency and mix driven as US dollar and euro prices for specialty pulp were relatively unchanged quarter-over-quarter. The higher effective Canadian dollar prices increased adjusted EBITDA by $1 million. The selling price of viscose and other grades increased by $51 per tonne due to higher US dollar selling prices and a weaker Canadian dollar, which declined by 1.2% versus the prior quarter. The higher viscose grade prices increased adjusted EBITDA by $1 million. Shipments were equal to 94% of capacity, compared to 85% in the June 2016 quarter. During the June 2016 quarter, the Temiscaming specialty cellulose pulp mill was idled for six days as part of its annual major maintenance outage. There were no major maintenance outages in the September 2016 quarter and the two pulp mills produced 8,800 more tonnes. Manufacturing costs declined by $9 million including $5 million of fixed cost absorption associated with the aforementioned productivity improvement. The higher pulp shipments combined with a higher percentage of specialty grades generated a favourable $2 million variance. Chemical business adjusted EBITDA was relatively unchanged.

The Forest Products segment generated adjusted EBITDA of $12 million on sales of $113 million for the quarter ended September 24, 2016, compared to adjusted EBITDA of $4 million on sales of $102 million in the prior quarter. SPF lumber sales increased by $4 million due to higher prices. Sales of logs increased by $5 million due to the seasonal increase in activity in the summer months. During the September 2016 quarter, the random length lumber reference price increased by US $20 per mbf (thousand board feet) while the reference price for stud lumber increased by US $30 per mbf. Currency was a positive factor as the Canadian dollar weakened. The net effect was that Canadian dollar selling prices increased by $20 per mbf, increasing adjusted EBITDA by $4 million. Lumber shipments were equal to 82% of capacity, unchanged from the prior quarter. In response to relatively low stud lumber prices, the Company idled the Senneterre, Quebec, sawmill in early February 2016, removing approximately 20 million board feet in the June 2016 quarter. The Senneterre sawmill operated on its normal two-shift basis in the September 2016 quarter. The delivered cash cost of SPF lumber declined by $22 per mbf. The summer months are normally lower cost operating periods.

The Paper Pulp segment generated adjusted EBITDA of $8 million on sales of $83 million for the quarter ended September 24, 2016, compared to adjusted EBITDA of $1 million on sales of $86 million in the June 2016 quarter. The $3 million decrease in sales was due to lower shipments, partially offset by higher selling prices. The benchmark price (delivered China) for bleached eucalyptus kraft (BEK) decreased by US $17 per tonne. However, US dollar prices for high-yield pulp actually increased by US $18 per tonne, allowing it to close the significant discount gap that had occurred over the last several quarters. Average selling prices for external sales in Canadian dollars increased by $29 per tonne, increasing adjusted EBITDA by $4 million. Pulp shipments were equal to 98% of capacity as compared to 107% in the prior quarter. Mill level costs declined by $3 million.

The Paper segment generated adjusted EBITDA of $19 million on sales of $97 million for the quarter ended September 24, 2016, compared to adjusted EBITDA of $16 million on sales of $99 million in the June 2016 quarter. The $2 million decrease in sales was due to lower newsprint shipments, partially offset by higher prices for coated bleached board and newsprint. The US dollar reference price for coated bleached board was unchanged quarter-over-quarter. The weaker Canadian dollar was a positive factor. Overall, average selling prices for coated bleached board were up $7 per tonne increasing adjusted EBITDA by $1 million. The coated bleached board shipment to capacity ratio was 107% compared to 105% in the prior quarter. Manufacturing costs were relatively unchanged. The US dollar benchmark price for newsprint increased by US $25 per tonne. The previously noted decline in the relative value of the Canadian dollar also favourably impacted price realizations which increased by $29 per tonne, increasing adjusted EBITDA by $1 million. The newsprint shipment to capacity ratio was 78% compared to 94% in the prior quarter. The Kapuskasing newsprint mill incurred nine days of downtime as part of an electrical load shedding program that reduces its average annual cost of purchased electricity. Despite producing 4,200 less tonnes, mill costs remained relatively unchanged quarter-over-quarter.
more at: http://tembec.com/en/Media/Press-Releases/tembec-reports-financial-results-its-fourth-fiscal-quarter-ended-september-24?section=investors

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