July 30, 2009 / 2:14 PM / 9 years ago

UPDATE 1-Tembec loss widens on weak demand, high costs

* Q3 loss C$0.38 shr vs loss C$0.27 shr

* Q3 sales down 33 pct

* Shares rise C$0.03 to C$0.56

TORONTO, July 30 (Reuters) - Canadian forest products company Tembec Inc TMB.TO said on Thursday its third-quarter loss widened due to weak demand, higher costs and the effects of a strengthening Canadian dollar.

Montreal-based Tembec booked a net loss of C$38 million ($35 million), or 38 Canadian cents a share, compared with a year-earlier loss of C$27 million, or 27 Canadian cents a share.

At the end of June 2009, the company had net cash of C$40 million plus unused operating lines of C$110 million.

Tembec said the strengthening Canadian dollar, deterioration in the newsprint market and relatively weak pulp and lumber markets all combined to harm financial performance in the quarter.

Sales fell 33 percent to C$407 million.

The company said it expects lumber markets to remain challenging. Although European and U.S. pulp markets are weak, Tembec said it sees some improvements in pricing.

Tembec shares rose 3 Canadian cents to 56 Canadian cents in early trade on the Toronto Stock Exchange.

$1=$1.08 Canadian Reporting by Euan Rocha; editing by Peter Galloway

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