Cascades Reports Second Quarter Profit
Aug. 11, 2010 - Cascades Inc. announced its financial results for the three months ended June 30, 2010.
Second quarter highlights
- Net earnings per share of $0.22 compared to net earnings per share of
$0.00 in the previous quarter and $0.28 in the same period of last
year (excluding specific items).
- Operating income before depreciation and amortization (EBITDA)
excluding specific items of $107 million, up 37% in comparison to
Q1 2010. EBITDA excluding specific items amounted to $121 million in
the second quarter of 2009.
- Cash flow from operations (adjusted) of $71 million compared to
$38 million in the first quarter of 2010 and $81 million in the same
period last year.
- Improved business conditions and increased demand and selling prices in
both North America and Europe.
- Total shipments up 3% compared to the first three months of the year
and up 9% compared to the second quarter of 2009 (excluding the impact
- Buy-back of 325,463 shares at an average price of $6.66 for a total
amount of approximately $2.2 million.
- Launch of a new antibacterial tissue hand towel, a world first in terms
of hand hygiene.
Commenting on the second quarter results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "As anticipated, we experienced a significant rebound in profitability compared to the previous quarter mostly as a result of the momentum in pricing and volumes in our different business units. All our segments delivered improved results as they benefited from selling price increases implemented during or prior to the second quarter.
"In addition, stronger demand combined with seasonal pick-up impacted positively our operational efficiency and financial results. In fact, during the quarter our overall operating rate reached 96%, the highest it's been in three years.
It is also important to note that these results were achieved despite the slow economic recovery as well as higher recycled fibre costs and Canadian dollar, up approximately 90% and 14% respectively compared to the same period last year."
Results analysis for the three-month period ended June 30, 2010 (compared to the previous year)
In comparison with the same period last year, sales rose by 2% to $998 million resulting from higher selling prices and a 9% increase in shipments (excluding the impact of the acquisition of the tissue assets of Atlantic Packaging), offset by the appreciation of the Canadian dollar.
Net earnings excluding specific items amounted to $21 million ($0.22 per share) in the second quarter of 2010 compared to $28 million ($0.28 per share) for the same period of last year. Including specific items, net earnings amounted to $21 million ($0.22 per share) compared to $30 million ($0.30 per share) for the same quarter in 2009.
The operating income excluding specific items amounted to $56 million compared to $66 million in Q2 2009. Improved volumes and selling prices as well as the optimization of our cost structure and higher operating rates were more than offset by the rise of raw material costs. When including specific items, operating income amounted to $50 million in comparison to $75 million in the same period of last year.
In the second quarter of 2010, these specific items impacted our operating income and/or net earnings (before tax):
- $6 million unrealized loss on financial instruments (impact on
operating income and net earnings);
- $6 million foreign exchange gain on long-term debt and financial
instruments (impact on net earnings).
Third quarter outlook
"Looking forward to the next quarter, we expect that the sequential improvement in profitability will carry on as a result of the continuous implementation of selling price increases in many of our operations," Lemaire said.
"Also, the favourable seasonality associated with the third quarter leads us to anticipate a stronger demand for most of our products. In fact, despite some scheduled downtime for maintenance, we anticipate our operating rates to remain at high levels. In terms of input costs, we should start to benefit from the drop in pricing of old corrugated containers (OCC), the main grade of recycled fibres consumed by Cascades, which peaked in March. All in all, we remain confident for the coming months, particularly for our containerboard operations."