Cascades Q1 Profit Jumps on Lower Operating Costs
May 14, 2009 - Cascades Inc. today announces its financial results for the three months ended March 31, 2009. Operating income before depreciation (OIBD or EBITDA) and net earnings excluding specific items increased significantly to respectively $107 million and $21 million ($0.22 per share) in the first quarter of 2009 compared to $59 million and a net loss of $9 million in the same period in 2008.
Excluding specific items, EBITDA also improved by $11 million in comparison to the previous quarter while net earnings increased by $3 million. This sequential rise constitutes the fourth quarter of consecutive growth in EBITDA.
Including specific items, the operating income before depreciation and net earnings grew respectively to $103 million and $37 million ($0.38 per share) in the first quarter of 2009 compared to $45 million and a net loss of $4 million for the same quarter in 2008.
Commenting on the quarterly results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "During the quarter, we benefited from restructuring initiatives implemented in the past twelve months, from the depreciation of the Canadian dollar and a more favourable variable cost environment. These factors have more than offset the capacity utilization rate of less than 80% in our packaging sector and our EBITDA margin on sales increased from 6% in the first quarter of 2008 to 11% in 2009. Our Tissue Group has continued to perform well and our boxboard operations' EBITDA almost tripled to $24 million. Since a trough in Q2 2008, this group's EBITDA has in fact been multiplied by 8."
Three-month Period ended March 31, 2009
In comparison with the same period last year, sales increased 1% to $970 million reflecting the increase in selling prices and the depreciation of the Canadian dollar which have more than offset the 12% drop in shipments.
The operating income from continuing operations amounted to $49 million compared to an operating loss of $6 million last year. When excluding specific items, operating income from continuing operations increased $45 million to $53 million. Despite lower sales volumes, operating results improved mainly due to higher selling prices, lower raw material and energy costs and the depreciation of the Canadian dollar.
The specific items that impacted the operating income in the first quarter of 2009 include a $3 million impairment loss following the announcement of the closure of the Quebec City corrugated box plant and $2 million in other closure and restructuring costs.
Net earnings of $37 million reflect a $14 million gain on purchase of long-term debt at 56% of their nominal value and $6 million in positive income tax adjustment following the change of the Quebec provincial tax rate for investment income.
The net debt remained relatively stable despite a $33 million negative impact of the depreciation of the Canadian dollar on long-term debt. The ratio of net debt to EBITDA excluding specific items in the last twelve months decreased from 5.9x in the fourth quarter of 2008 to 5.1x in the first quarter of 2009.
Near Term Outlook
Alain Lemaire, President and Chief Executive Officer added: "We expect to benefit from the seasonal pickup in demand in the second quarter and we anticipate that our two main variable costs, recycled fibre and energy, should stay relatively stable. However, we remain cautious in regards to short term business conditions considering the decrease in selling prices for certain of our products in recent months and the potential appreciation of the Canadian dollar."
Founded in 1964, Cascades produces, converts and markets packaging and tissue products composed mainly of recycled fibres. The company employs close to 13,000 employees.
SOURCE: Cascades Inc.