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The Tembec softwood lumber plant in operation Thursday Nov 13, 2008 in Senneterre Que.

Jacques Boissinot/The Canadian Press

Forest products company Tembec Inc. has widely missed analyst forecasts by reporting a $14-million loss on a 10 per cent drop in sales in the second quarter.

The Montreal-based company lost 14 cents per share for the period ended March 24, compared with a six-cent profit a year earlier or $6-million.

Sales fell to $407-million from $452-million.

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Tembec was expected, on average, to break even on $412-million of revenues in the quarter, according to analysts poll by Thomson Reuters.

The pulp, paper and lumber producer said its operating earnings before depreciation, amortization and other items (adjusted EBITDA) were $2-million for the quarter, compared with $34-million a year ago and $12-million in the first quarter.

All operating segments reported lower sales and earnings this year, lead by high-yield pulp.

It lost $16-million on $70-million of external sales compared to a $2-million profit on $95-million of sales a year ago. Market conditions for high-yield pulp remained weak in the quarter.

Despite favourable market conditions, the specialty cellulose and chemical pulp segment generated adjusted EBITDA of just $31-million on sales of $172-million, compared with $44-million on $176-million of sales last year.

Tembec said the relatively weak paper pulp markets had been expected but not a stronger Canadian dollar.

It anticipates markets for specialty cellulose will remain strong except for the viscose grades, where new supply is leading to lower prices.

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