Tembec has posted a net loss of $16 million on sales of $401 million in its first quarter, ending on December 24, 2011.

For comparison, in the same quarter of 2010, the company reported a net loss of $11 million on sales of $422 million.

Tembec said its quarterly results were lower than anticipated due to relatively weak pulp markets that led to high-yield pulp production curtailments.

The company feels that the prices of paper have received their cyclical low and they anticipate recovery of paper pricing in the coming quarters. Tembec said the specialty cellulose pulp market is strong, and they anticipate higher pricing in 2012.

Tembec’s forest products segment is continuing to deal with a sluggish demand from the U.S. for lumber.

Tembec has recently disclosed a relatively large scale capital expenditure program, with a strong emphasis on its two specialty cellulose pulp mills. The cornerstone of the program is a $190 million cogeneration plant to be constructed at the Temiscaming, Quebec, site that will require two years to complete. The project will materially improve the mill’s cost structure and margins. The company expects to finalize all required agreements in order to proceed with the project in the March 2012 quarter.

Recently Tembec announced the sale of its two B.C. sawmills for proceeds of $60 million, subject to working capital adjustments. The transaction is expected to close at the end of the March 2012 quarter.

Source: Tembec (view release)