MONTREAL, April 26 (Reuters) - Canadian pulp and paper producer Tembec Inc. TBC.TO took a heavy loss in its second quarter because of slumping prices and U.S. duties on lumber shipments, the company said on Friday. Tembec said it had a loss of C$54.6 million ($35 million), or 64 Canadian cents a share, before unusual items, in the quarter ended March 30, compared with net earnings of $20.6 million, or 25 Canadian cents a share, a year earlier. An after-tax charge of C$40 million, or 46 Canadian cents a share, on the early redemption of debt took its net loss in the latest second quarter to C$94.6 million, or C$1.10 a share, the company said. Gross sales rose 15 percent to C$849 million from C$739 million. Four analysts polled by Thomson Financial/First Call had expected, on average, a loss of 31 Canadian cents a share, but Tembec warned on April 17 it was forecasting a net loss of 65 Canadian cents a share before the after-tax charge. The paper division saw its profit and sale decline from the first quarter as prices of all paper grades slid, the company said. The paper segment posted earnings before interest, taxes, depreciation and amortization (EBITDA) of C$5.8 million, compared with C$34.6 million in the first quarter. About C$15 million of the profit decline came from costs linked to the maintenance shutdown and upgrade of its Louisiana mill. Paper sales slipped to C$209.3 million from C$228 million in the prior quarter. Pulp prices also fell, lowering second-quarter EBITDA to C$14.3 million from C$18.6 million in the first quarter. Pulp sales improved to C$314.9 million from C$280.5 million. The forest product division was the only one where profit increased, thanks to higher lumber prices and a small decrease in the provisions set aside for the duties imposed by Washington on Canadian lumber shipments. Lumber EBITDA reached C$18.3 million in the second quarter, compared with a loss of C$600.000 in the first quarter. Lumber sales improved to C$243.6 million from C$212.0 million. Tembec stock climbed 20 Canadian cents to C$12.05 on the Toronto Stock Exchange on Friday afternoon. The stock is up almost 30 percent from its year low of C$9.40 touched last October. The TSE paper and forest product subindex shot up 39 percent over the same period of time. ($1=$1.56 Canadian)