Cascades posts $1.27B in Q3 sales, marginally down from Q2
By P&PC Staff/Cascades
By P&PC Staff/Cascades
Cascades has reported its financial results for the third quarter of 2020, posting a slight decrease in sales from the prior quarter – $1.27 billion compared to sales of $1.28 billion in Q2 2020 – but an increase from $1.26 billion in Q3 2019.
Financial results for Q3
Sales of $1,275 million grew by $11 million, or one per cent, compared with the same period last year.
This was largely a reflection of the volume-driven seven per cent increase in the containerboard segment and favourable foreign exchange rate for all business segments. These benefits were offset by lower sales in the tissue business driven by demand contraction in the away-from-home segment and lower average selling prices and/or less favourable sales mix in all packaging segments.
While volumes grew in the specialty products segment, these benefits were largely offset by the mill closure and business divestiture completed in 2019.
The corporation generated an operating income before depreciation and amortization (OIBD) of $154 million in the third quarter of 2020, down from $181 million in the third quarter of 2019. On an adjusted basis, third quarter OIBD totalled $162 million, an increase of $1 million, or one per cent from the $161 million generated in the same period last year.
The annual adjusted OIBD reflects increases of $12 million from tissue and $4 million from boxboard Europe and stable results in the specialty products segment. These benefits were offset by a decrease of $18 million from the containerboard segment, as the benefits of increased volume were offset by higher year-over-year raw material costs and a less favourable selling price and sales mix. Research and development tax credits of $9 million were recorded in the current quarter.
On an adjusted basis, third quarter 2020 OIBD stood at $162 million, versus $161 million in the previous year.
For the three-month periods ended September 30, 2020, the corporation posted net earnings of $49 million, or $0.51 per share, compared to net earnings of $43 million, or $0.45 per share, in the same period of 2019.
On an adjusted basis, the corporation generated net earnings of $48 million in the third quarter of 2020, or $0.50 per share, compared to net earnings of $28 million, or $0.30 per share, in the same period of 2019.
Comment from CEO
“We are pleased with our consolidated third quarter results,” says Mario Plourde, president and CEO.
“Within an ever-evolving business environment, demand levels for containerboard remained robust. This strength drove higher sequential quarterly sales volume in this business, offsetting higher energy costs and an approximate $3 million impact from unplanned operational shutdowns at our Niagara Falls, N.Y. complex.
“Similarly, our specialty products segment generated solid results, benefiting from strong demand for our sustainable food packaging product offerings. Results in our tissue business were mixed. As expected, demand remained strong for consumer tissue, while the reverse was true for away-from-home products given the impact that COVID-19 is having on businesses, restaurants, hotels and schools.
“This segment, which accounts for approximately 40 per cent of our annual tissue sales, experienced sharp decreases in demand for some products. We have taken steps to adjust production capacity by temporarily closing several facilities that serve this market, and continue to evaluate opportunities to adapt some capacity for different products.
“On the strategic side, we are very pleased to have announced the launch of our Bear Island project in mid-October. This is an important strategic investment for our containerboard business, one which we are confident will benefit operational performance, enhance our product offering in lightweight recycled containerboard and position our containerboard platform for long-term profitable growth within this competitive industry.
“We are equally pleased to have completed the $125 million equity issuance (offering) that was announced concurrently with the Bear Island project. The proceeds of this offering will be primarily dedicated to financing Bear Island, but may also be used for other ongoing capital projects.
“In light of ongoing ambiguity related to the pandemic, we are cautiously optimistic regarding our performance in the near-term. Demand dynamics in containerboard remain strong, with results expected to also benefit from the announced US$50/st price increase beginning in the fourth quarter.
“In tissue, usual seasonal softness in the fourth quarter and COVID-19 driven demand contraction in the away-from-home product categories are expected to translate into weaker sequential performance.
“Ongoing modernization initiatives in this business, which include the integration of the Orchids assets and final investments in converting equipment, are delivering targeted returns and will generate increasing benefits as implementation costs trend down.”
Read the full Q3 2020 Cascades financial report.