By: The Working Forest Staff
MONTREAL – Pulp, paper and lumber producer Tembec announced net earnings of $17 million in the June 2017 quarter compared to net earnings of $9 million in the June 2016 quarter. Operating earnings before depreciation, amortization and other items (adjusted EBITDA) was $59 million for the three-month period ended June 24, 2017, as compared to adjusted EBITDA of $26 million a year ago and adjusted EBITDA of $54 million in the prior quarter.
In other Tembec news, shareholders have approved the acquisition by Rayonier Advanced Materials, but the transaction still requires regulatory approvals.
For the company’s Forest Products segment, lumber markets continued to be strong and U.S. dollar prices increased quarter-over-quarter, Tembec reports. A company statement says the recently announced CVD and ADD preliminary determinations in the softwood lumber dispute are impacting prices.
The company incurred a $4 million charge in the June 2017 quarter for CVD deposits only. ADD deposits will begin in the September 2017 quarter. The company is subject to the “All Other” preliminary combined rate of 26.75 per cent, which will generate an expense of $8 million to $10 million per quarter, depending on the price of lumber.
The Forest Products segment generated adjusted EBITDA of $20 million on sales of $114 million for the quarter ended June 24, 2017, compared to adjusted EBITDA of $10 million on sales of $110 million in the prior quarter. SPF lumber sales increased by $11 million, due primarily to higher prices, says Tembec’s media release. “During the June 2017 quarter, the random length lumber reference price increased by US $45 per mbf while the reference price for stud lumber increased by US $76 per mbf. Currency was also favourable as the Canadian dollar averaged US $0.742, a 1.7 per cent decrease from US $0.755 in the prior quarter. The combined effect was that Canadian dollar selling prices increased by $60 per mbf, increasing adjusted EBITDA by $10 million. Lumber shipments were equal to 87% of capacity, unchanged from the prior quarter. Cost were similar quarter-over-quarter.”
The press release continues: “While the CVD and ADD deposits will impact future cash flow, the company’s relatively high liquidity combined with improving margins have put it in a good position to continue to reduce its level of indebtedness and proceed with cost reducing capital expenditures.”