Cascades Reports Fourth Quarter '08 Loss
Feb. 27, 2009 - Cascades Inc.announces its unaudited financial results for the three months and fiscal year ended December 31, 2008. Operating income before depreciation (OIBD or EBITDA) and net earnings excluding specific items increased respectively to $96 million and $17 million ($0.17 per share) in the fourth quarter of 2008 compared to $82 million and $1 million ($0.01 per share) in the same period last year. With these better results in the last quarter, Cascades' 2008 operating income before depreciation and net earnings reached $306 million and $3 million respectively.
In the fourth quarter ended December 31, 2008, net loss including specific items amounted to $19 million ($0.20 per share) compared to net earnings of $12 million ($0.12 per share) for the same quarter in 2007 and a net loss of $7 million ($0.07per share) in the previous quarter.
For the fiscal year ended December 31, 2008, the net loss including specific items amounted to $55 million ($0.56 per share) compared to net earnings of $95 million ($0.95 per share) in 2007.
"In 2008, we were confronted with very challenging business conditions throughout the year including in particular, a severe economic downturn in latter half of the fourth quarter," said Alain Lemaire, president and CEO. "However, despite of all these factors, we reported positive annual net earnings and relatively stable cash flow from operations excluding specific items. During the second half of the year we benefited from restructuring initiatives in our boxboard segment, the depreciation of the Canadian dollar and a more favourable variable cost environment which more than offset the weakness in demand in certain of our sectors.
"We are also fortunate that our balanced portfolio of assets helps to mitigate the impact of a cyclical slowdown as demonstrated in the fourth quarter where the drop of volumes in our packaging operations was offset by record quarterly results in our Tissue Papers Group due in part, to strong demand for recycled products," Lemaire said.
Three-month period ended December 31, 2008
In comparison with the same period last year, sales increased $83 million or 9% to $1 billion reflecting generally higher prices and the depreciation of the Canadian dollar. Operating loss from continuing operations amounted to $4 million compared to an operating income of $19 million achieved for the same period last year. When excluding specific items, operating income from continuing operations increased 21% to $40 million in comparison to $33 million for the same quarter in 2007. Despite lower sales volumes, operating results improved in the quarter compared to last year resulting from higher selling prices, lower raw material and energy costs and the depreciation of the Canadian dollar. The fourth quarter net earnings excluding specific items of $17 million reflect a $5 million recovery of income tax resulting mainly from provision adjustments for prior years.
Fiscal year ended December 31, 2008
In 2008, sales increased by $88 million to $4.0 billion due to improved average selling prices. Operating income from continued operations amounted to $15 million compared to $144 million achieved last year. Operating income from continuing operations excluding specific items was $92 million compares to $142 million achieved in 2007. Operating results were lower in 2007 as the first six months of the year were impacted by sharp increases in our input costs such as raw materials, energy and freight. Improved selling prices during the second part of the year were not sufficient to offset the increase in our input costs and the weak performance of our North American boxboard sector in the first six months of 2008.
Near term outlook
"From a business standpoint, we remain cautiously optimistic despite recent and ongoing selling price and demand erosion for certain of our products. In fact, we expect to continue benefiting from relatively stable recycled fibre and energy costs, from the lower Canadian dollar, and from our significant position in consumer markets such as tissue papers and food packaging which are proving to be more recession resistant," Lemaire explained.
"Also, following a weak month of December for our packaging operations, business conditions improved slightly in January. On the financial front, notwithstanding our increased liquidity and the recently announced amendment of our credit agreement, we will continue to carefully manage our cash flows to preserve financial flexibility in the face of economic uncertainty," he added
SOURCE: Cascades Inc.