Cascades Posts Record Results for the Third Quarter of 2015
"Higher average selling prices, shipments and a favourable exchange rate allowed our Tissue Papers and Containerboard groups to respectively achieve record quarterly OIBD." – Mario Plourde, President and CEO, Cascades, Inc.
Nov. 11, 2015 - Cascades Inc. (CAS.TO), a leader in the recovery and manufacturing of green packaging and tissue paper products, announces its unaudited financial results for the three-month period ended September 30, 2015.
Mr. Mario Plourde, President and Chief Executive Officer, had the following comments on the most recent quarterly results: "We are pleased with the third quarter results, a result of the good performance of all our groups. Our OIBD of $134 million is a quarterly record. The difficult portfolio rationalization measures and strategic initiatives undertaken over the last few years, combined with better productivity and cost reduction measures in the Tissue Papers Group, have enabled us to benefit more fully from favourable market conditions, particularly in Canada.
Higher average selling prices, shipments and a favourable exchange rate allowed our Tissue Papers and Containerboard groups to respectively achieve record quarterly OIBD. The Specialty Products Group also significantly improved its earnings due to increased profitability in its recovery activities. In Europe, results were sequentially lower due to seasonality, but stable compared to the same period last year despite a softer market and the lack of energy credits during the quarter. Finally, our earnings per share excluding specific items continue to improve, benefiting not only from these better results but also from the increasing contribution of the Greenpac mill, which represented $0.04 per share during the third quarter."
Results Analysis for the Three-Month Period Ended September 30, 2015 (compared to the same period last year)
In comparison with the same period last year, sales increased by 13% to $1,026 million due to a weaker Canadian dollar, higher shipments, mainly in the Tissue Papers and Containerboard groups, and higher average selling prices in the Containerboard Group. These factors more than offset lower average selling prices in the Specialty Products Group.
Operating income, excluding specific items, increased from $49 million in the third quarter of 2014 to $89 million in the third quarter of 2015. The above-mentioned factors explain most of the increase in operating income, while higher raw material costs for our Boxboard Europe Group negatively impacted results. Lower energy and operating costs resulting from improved productivity also positively contributed to operating income.
When including specific items, operating income amounted to $77 million in comparison to $51 million for the same period of last year. In the third quarter of 2015, the following specific items, before income taxes, impacted our operating income and/or net earnings:
- an $11 million loss related to an impairment recorded on certain assets of our Specialty Products Group (operating income and net earnings)
- a $7 million unrealized loss on derivative financial instruments (operating income and net earnings)
- a $5 million gain related to restructuring measures in our Specialty Products Group and a $1 million gain related to the sale of a building in our Containerboard Group (operating income and net earnings)
- a $36 million foreign exchange loss on long-term debt and financial instruments and a $1 million loss related to interest rates swaps (net earnings)
- a $17 million gain in our share of results of associates and joint ventures, including a $15 million dilution gain resulting from the change of our equity ownership in Boralex, an associate investment (net earnings).
Net earnings, excluding specific items, amounted to $49 million ($0.52 per common share) in the third quarter of 2015 compared to $4 million ($0.04 per common share) for the same period in 2014. Including specific items, net earnings amounted to $22 million ($0.24 per common share) in the third quarter of 2015 compared to a net loss of $16 million ($0.17 per common share) in the same period in 2014.
Results Analysis for the Three-Month Period Ended September 30, 2015 (compared to the previous quarter)
In comparison to the previous quarter, sales increased by 8% to reach $1,026 million due to favourable exchange rates, higher shipments in our Tissue Papers and Containerboard groups and higher average selling prices for all our groups.
Operating income, excluding specific items, increased from $59 million in the second quarter of 2015 to $89 million in the third quarter of 2015. In addition to the above-mentioned factors, lower energy costs also contributed to offset higher raw material costs and lower seasonal volumes in Europe during the third quarter.
In commenting on the outlook, Mr. Plourde added: "For the remainder of the year, we do not expect significant changes in market conditions or recycled paper costs. The fourth quarter is historically weaker than the third due to seasonality, and 2015 should be no exception. However, we are confident that we can do better than during the same period last year.
The operating units of our Containerboard Group are benefiting from sustained demand and should maintain their good performance. As the ramp-up of its new sites and the implementation of certain initiatives to improve processes are well advanced, the Tissue Papers Group is better positioned to compete. Similar to all our other groups in North America, the Specialty Products Group should continue to benefit from the weakness of the Canadian dollar and its positive influence on demand for products of our Canadian customers. As for Europe, the latest price increase compensated for higher raw material costs, and we expect a stable performance for the last quarter."
Dividend on Common Shares
The Board of Directors of Cascades declared a quarterly dividend of $0.04 per common share to be paid December 10, 2015, to shareholders of record at the close of business on November 27, 2015. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada).
Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. To learn more, please visit: www.cascades.com.
SOURCE: Cascades Inc.