Cascades has reported its unaudited financial results for the three-month period ended September 30, 2018.
Cascades president and CEO Mario Plourde said: “Strong fundamentals in Containerboard Packaging were the driving factor behind our solid third quarter performance. This was reinforced by successful margin realignment in Recovery activities, which contributed to improved quarterly earnings in Specialty Products.
“Results in the Tissue division continued to be impacted by rising raw material and logistics costs, in addition to the capacity-driven competitive reality. While margins in this division were below expectations as a result of these factors and weather-related events, the solid quarterly sales performance highlights the underlying strength of our tissue platform, and supports the strategic investments being made to propel long-term competitive positioning.
“Finally, the European Boxboard segment, via our 57.8% equity position in Reno de Medici S.p.A., announced solid results in the seasonally softer third quarter that delivered a marked improvement in profitability year-over-year.”
Sales of $1,172 million increased by $69 million or 6% compared to the same period last year. This was driven by a 12% increase in the Tissue segment, reflecting volume improvements, a more favourable sales mix, exchange rate and higher average sales prices during the period.
An 8% increase in the Containerboard Packaging division similarly benefited sales, and was driven by higher sales prices and the acquisition of Ontario converting facilities at the end of 2017.
Sales generated by the European Boxboard segment were up marginally compared to the prior year, as lower shipments were offset by improvements in both pricing and sales mix, and a favourable Canadian dollar – euro exchange rate.
Finally, third quarter sales in the Specialty Products division were below prior year levels, reflecting the lower sales in recovery activities following the significant decrease in year-over-year prices of brown recycle fibres.
Third quarter operating income stood at $78 million , a notable improvement from the $51 million generated last year. This increase was driven primarily by the Containerboard Packaging segment, where strong results reflect the improved raw material pricing environment and implementation of the industry-wide US$50 /st price increase.
Operating income similarly benefited from improved results generated by the European Boxboard segment, reflecting lower raw material pricing and higher average selling prices. As was the case in the second quarter, the contribution from the Specialty Products division decreased slightly compared to last year as a result of the impact of lower raw material prices on recovery activities. Lastly, results in the Tissue division reflected higher raw material and transportation costs, the effects of which mitigated the benefits derived from a more favourable pricing and sales mix, and higher volumes.
On an adjusted basis 1 , third quarter operating income stood at $76 million , versus $53 million in the prior year.
The specific items, before income taxes, that impacted our third quarter 2018 operating income and/or net earnings were:
a $2 million unrealized gain on financial instruments (operating income and net earnings)
a $1 million restructuring charge related to the forthcoming closure of two sheets plants in Ontario (operating income and net earnings)
a $1 million gain related to a plant closed in a previous year (operating income and net earnings)
a $3 million foreign exchange gain on long-term debt and financial instruments (net earnings)
For the three-month period ended September 30, 2018 , the Corporation posted net earnings of $36 million , or $0.38 per common share, compared to net earnings of $33 million , or $0.35 per common share in the same period of 2017.
On an adjusted basis 1 , the Corporation generated net earnings of $38 million in the third quarter of 2018, or $0.40 per common share, compared to net earnings of $19 million , or $0.20 per common share, in the same period of 2017.
Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. The Corporation employs 11,000 employees, who work in more than 90 units located in North America and Europe .
With its management philosophy, half a century of experience in recycling, and continuous efforts in research and development as driving forces, Cascades continues to serve its clients with innovative products. Cascades’ shares trade on the Toronto Stock Exchange, under the ticker symbol CAS.
Source: Company Press Release