Tembec Shares Slide on Net Losses for Fiscal First Quarter

Tembec Shares Slide on Net Losses for Fiscal First Quarter

By: AllPennyStocks.com News

Monday, February 4, 2013

The Canadian markets closed out last week with losses as investors digested information on the Industrial Product Price Index, the Raw Materials Price Index and Gross Domestic Product as well as a steady stream of ongoing earnings reports. On the economic slate, Canada’s economy accelerated in November more than economists thought it would. Gross domestic product, the total of all goods and services produced in the country and widest barometer of economic health, increased to 0.3 percent during the month from 0.1 percent in October, according to a report by Statistics Canada. Economists were expecting 0.2 percent growth. Year-over-year, GDP grew by 1.3 percent compared to November 2011. Economists were calling-for 1.4 percent growth.

Industrial prices for the country were in line with economist expectations of a flat month in December after contracting by 0.3 percent in November. On the year, industrial prices – the price that manufacturers receive for the products – increased by 0.5 percent. Stats Can also reported from Ottawa that its index of prices paid by manufacturers for raw materials dropped by 2 percent in December from November. Economists predicted 0.3 percent expansion for the month.

On the earnings front, forest products company Tembec, Inc. (TSX:TMB) reported that it shaved its fiscal first quarter loss to $10 million, or 10 cents per share, compared to a net loss of $16 million, or $16 cents per share in Q1 fiscal 2012. Revenue for the quarter declined to $376 million from $401 million in the year prior quarter.

Operating earnings before depreciation, amortization and other items (adjusted EBITDA) was $19 million for the three-month period ended December 29, 2012, as compared to adjusted EBITDA of $12 million a year ago and adjusted EBITDA of $23 million in the prior quarter.

The company’s Specialty Cellulose Pulp segment saw sales contract from $127 million in the year earlier quarter to $103 million in the quarter ended December 29, 2012, including a $19 million decline in pulp sales of specialty and viscose grades.

The Paper segment also saw sales drop; from $96 million to $78 million. Adjusted EBITDA fell from $14 million to $6 million for this segment in comparing the 2013 quarter with the 2012 quarter.

The Forest products segment had lower sales and adjusted EBITDA as well. The only segment to show growth was the company’s Paper Pulp business, which generated nil adjusted EBITDA on sales of $117 million. This was an improvement from negative adjusted EBITDA of $18 million on sales of $140 million in the year prior quarter.

The quarter was in line with what the company had forecast. Looking ahead, Tembec said that it expects normal seasonal increase in prices in the March quarter. “While the recent housing statistics in the United States are encouraging, we continue to forecast a slow and gradual recovery in housing, with lumber demand and prices following a similar pattern,” Tembec said in a corporate statement.

Shares of Tembec are trading lower just mid-day on Monday as the dismal earnings report continues to linger in investors minds, down by 3.0 percent at $2.92 per share. Shares had seen a sharp climb from lows in mid-November of $1.70 to hit as high as $3.36 in the first days of the new year.

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