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Cascades Reports First Quarter Results

May 10, 2007 (Press Release) - Cascades Inc. reports net earnings of $22 million ($0.22 per share) for the quarter ended March 31, 2007. This compares with net earnings of $6 million ($0.07 per share) for the same period in 2006. When excluding specific items, net earnings for the first quarter of 2007 amounted to $5 million ($0.05 per share) compared to net earnings of $6 million ($0.07 per share) for the same quarter in 2006.

BUSINESS HIGHLIGHTS

- Quarterly sales exceed the billion $ mark for the first time in Cascades' history.

- Improved operating income before depreciation compared to Q1 2006 due to:

  • The acquisition of the remaining 50% of Norampac;
  • Generally higher prices;
  • And this despite the quarterly increase of approximately 55% in recycled paper costs which led to $33 million in additional costs.

- Cascades continues to position itself as a leader in sustainable development:

  • Launch of Bioxo™, a worldwide first, containers made from totally oxo-degradable polystyrene foam;
  • Agreement with a leading printer to supply recycled fine paper made of 100% post-consumer fibre for all their books published in black and white;
  • Announcement of an investment of $27 million for energy efficiency at the Trenton containerboard mill, which it is expected to reduce our Canadian annual greenhouse gas emissions by more than 70,000 tonnes (14%).

Commenting on the quarterly results, Alain Lemaire, president and chief executive officer stated: "First quarter results were significantly impacted by the sudden increase in waste paper costs and the unexpected halt in production at the coated recycled boxboard mill in Toronto. Despite these negative events we were able to deliver stable earnings quarter-over-quarter as a result of improved prices. Also, with the support of our employees, we continued to focus on cost reduction, less-performing assets and substainable development to better position ourselves for the future."

THREE-MONTH PERIOD ENDED MARCH 31, 2007

Sales increased 26% during the first quarter of 2007 amounting to $1.027 billion as a result of acquisitions realized in 2006. Operating income amounted to $55 million compared to $31 million achieved for the same period last year.

Operating income from continuing operations excluding specific items amounted to $31 million compared to $29 million last year and mainly excludes a gain of $25 million on the sale of our joint-venture interest in GSD Packaging, LLC, within our Boxboard Group.

OUTLOOK

Lemaire added, "We expect that the seasonal pick up in activity in most of our business segments and selling price improvements should positively impact our second quarter results. However, business conditions will continue to be challenging as a result of high fiber costs, the recent increase of the $CA and energy prices, as well as the slower economic growth in the U.S.. Given these conditions, we will therefore continue to concentrate efforts to reduce costs and deliver on our action plan."

Founded in 1964, Cascades produces, transforms and markets packaging and tissue products composed mainly of recycled fibres. Cascades employs close to 14,000 employees in North America and Europe.

SOURCE: Cascades Inc.




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