Cascades Posts Second Quarter Results
Aug. 7, 2007 - Cascades Inc. today reported net earnings of $45 million ($0.45 per share) for the quarter ended June 30, 2007. This compares with net earnings of $33 million ($0.41 per share) for the same period in 2006. When excluding specific items(1), net earnings for the second quarter of 2007 amounted to $7 million ($0.07 per share) compared to net earnings of $16 million ($0.20 per share) for the same quarter in 2006.
"Our results were negatively impacted by the rapid appreciation of the Canadian dollar and by the increase in the cost of recycled papers. On the other hand, we were able to improve our sales and earnings in comparison to the first quarter due to seasonally higher shipments as well as better prices mainly in our packaging segment," said Alain Lemaire, president and CEO.
"In addition, we continued delivering on our strategic plan with a proposed business combination involving the second largest European producer of recycled boxboard. The closing of this transaction will appreciably improve the situation of Cascades in Europe given the creation of an operationally and financially stronger company better able to address the demands of global customers," Lemaire said.
THREE-MONTH PERIOD ENDED JUNE 30, 2007
Sales increased 24% during the second quarter of 2007 amounting to $1.041 billion as a result of acquisitions realized in 2006. Operating income from continuing operations amounted to $27 million compared to $44 million achieved for the same period last year.
Operating income from continuing operations excluding specific elements amounted to $33 million which excludes a $4 million loss on financial derivatives instruments as well as a $2 million legal settlement. This amount compares to $43 million achieved for the same period last year.
Net earnings for the quarter include a $21 million foreign exchange gain on U.S. denominated debt as well as a $15 million dilution gain reflecting the adjustment of our equity investment in Boralex following their recent issuance of equity.
"We expect business conditions will continue to be challenging as a result of high fiber costs, the continuous increase in the value of the $CA and the risk of slower economic growth in the U.S.," Lemaire said. "Given these conditions and with the support of our employees, we will continue to focus on lowering our costs and improving our product offering. Also, we will continue to address less-performing assets and to seek ways to maintain our leadership position in in the area of sustainable development. Finally, in regards to the possible combination with Reno de Medici S.p.A. in Europe, we are progressing as expected and we anticipate definitive agreements to be signed by the end of 2007 and the merger to be effective early in 2008 upon expiry of applicable statutory delays."
NOTE: (1) Specific items are defined to include charges for impairment of assets, charges for facility or machine closures, debt restructuring charges, gains or losses on sale of business unit, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non-recurring nature.
SOURCE: Cascades Inc.