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Tembec says strong lumber prices helped offset soft pulp, flat paper earnings

MONTREAL – Tembec Inc. (TSX:TMB) ended its 2014 financial year with a lower fourth-quarter net profit, but higher sales and adjusted earnings compared with the same time last year.

The Quebec-based pulp, paper and lumber producer said Thursday it earned a net profit of $5 million or five cents per share in the quarter ended Sept. 27, down from $14 million or 14 cents per share a year earlier.

However, the company said its operating earnings rose to $29 million from $24 million a year earlier.

Revenue increased to $371 million from $352 million in the fourth quarter of its 2013 financial year.

Tembec’s forestry segment generated about one-third of total sales, with the rest coming from segments that produce specialty pulp, paper pulp and paper.

“Overall, the September 2014 quarterly results were better than anticipated,” Tembec said Thursday.

It said higher lumber prices accounted for a significant portion of the outperformance, but it expects seasonally weaker prices during the current quarter, which begins Tembec’s 2014-15 financial year.

In addition to its financial results, Tembec said it may not be able to complete a B.C. land sales initiative until after the end of the calendar year. It has sold $60 million of land by the end of September, but said it expects that a sale of the remaining 6,100 hectares is unlikely to be finished by December, the target date for having $70 million in land sales.

The company also said construction of the Temiscaming Cogen project is now projected at $265 million, up $10 million from the previous estimate, mainly due to higher labour costs. The boiler and turbine have been installed and the turbine is expected to begin producing contract power by mid-December, about two weeks later than anticipated.