Cascades Posts Fourth Quarter Profit
Feb. 27, 2008 - For the fiscal year ended December 31, 2007, Cascades Inc. reports unaudited net earnings of $95 million ($0.95 per share) compared to net earnings of $3 million ($0.04 per share) for the same period in 2006. When excluding specific items(1), net earnings amount to $22 million ($0.22 per share) compared to net earnings of $52 million ($0.64 per share) in 2006.
For the fourth quarter ended December 31, 2007, net earnings amounted to $12 million ($0.12 per share) compared to a net loss of $46 million ($0.56 per share) for the fourth quarter ended December 31, 2006. When excluding specific items(1), net earnings for the fourth quarter of 2007 amounted to $1 million ($0.01 per share) compared to net earnings of $13 million ($0.16 per share) for the same quarter in 2006.
Commenting on the yearly results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "Given the rapid appreciation of the Canadian dollar and rising fiber costs, 2007 was definitely a challenging year for Cascades. However, in spite of these significant headwinds, we remain focused on delivering on our strategic plan. In the past twelve months, we continued to streamline our portfolio of assets, to implement restructuring initiatives, and we announced the merger with Reno de Medici in Europe. With the acquisition of Norampac at the end of 2006, Cascades is now in a stronger operational and financial position to continue its turnaround."
Three-month Period Ended December 31, 2007
Sales increased by 11% during the fourth quarter of 2007, amounting to $937 million compared with $843 million for the same period last year. Operating income amounted to $19 million for the period compared to operating losses of $17 million for the same quarter last year.
Operating income from continuing operations excluding specific items amounted to $33 million. Specific items include, amongst others, a loss of $10 million on the sale of the Red Rock linerboard mill (Containerboard group), $3 million of restructuring and closure costs in regards to the Red Rock mill and the St-Jerome fine papers mill (Specialty Products group), as well as a $3 million gain from the sale of a non-core participation. This compares to operating income from continuing operations excluding specific elements of $37 million realized last year. Net earnings for the fourth quarter include an after-tax loss of $3 million on the sale of the Thunder Bay fine papers mill (discontinued operations), an after-tax $14 million foreign exchange gain on $U.S. denominated debt, as well as $10 million in positive adjustment to future tax following reduction of the federal tax rate in Canada.
Fiscal Year Ended December 31, 2007
Sales increased 20% in 2007 to $3.9 billion as a result of business acquisitions and better selling prices. Operating income from continued operations amounted to $144 million compared to $96 million achieved last year.
Operating income from continuing operations excluding specific items amounted to $142 million compared to $154 million last year. Specific items include, amongst others, a gain of $25 million on the sale of our joint-venture interest in GSD Packaging (Boxboard), a loss of $10 million on the sale of the Red Rock mill, and $6 million in restructuring and closure costs associated with the Red Rock and the St-Jerome mills. Net earnings for the fiscal year ended December 31, 2007 include $6 million in after-tax impairment loss and closure costs for the Scierie Lemay (discontinued operations), a $15 million dilution gain reflecting the adjustment of our equity investment in Boralex, $49 million in after-tax foreign exchange gains on $U.S. denominated debt, as well as $16 million in positive adjustment to future tax following the reduction of the tax rate in Canada and in Germany.
Mr. Alain Lemaire, President and Chief Executive Officer added: "We expect business conditions will continue to be challenging in the first half of the year as a result of high fiber costs and the uncertain economic environment. We will however maintain and strengthen initiatives aimed at improving profitability through increased operational efficiency and enhanced product offering. Also, we will continue to focus on less performing assets with the goal of reaching an acceptable level of profitability within a reasonable time frame. As we have done in the last three years, we will continue to act proactively."
Dividend on Common Shares and Normal Course Issuer Bid
The Board of Cascades declared a quarterly dividend of $0.04 per share to be paid March 21, 2008 to shareholders of record at the close of business on March 7, 2008. This dividend paid by Cascades is an "eligible dividend" as per the proposed changes to the Income Tax Act (Bill C-28, Canada). Pursuant to its normal course issuer bid, the Company purchased during the fourth quarter 132,200 of its common shares at an average price of $8.47 for a total of 492,700 shares purchased for the fiscal year.
The activities of the Company's Greenfield SAS pulp mill located in France and Scierie Lemay sawmill located in Quebec were reclassified as discontinued operations during the fourth quarter of 2007. Consequently, the comparative financial information of 2006 and 2007 have been restated to reflect this change.