Cascades presents first quarter financial report
By P&PC staff
By P&PC staff
May 14, 2018 – Cascades’ strong containerboard fundamentals are driving a positive outlook for the remainder of the year, the company announced in reporting its first-quarter results for 2018.
Sales through the first quarter, ending March 31, were $1,098 million compared to $1,082 million in the fourth quarter of 2017.
“Our consolidated first quarter performance improved both year-over-year and sequentially in terms of sales levels, shipments and operating income,” Mario Plourde , president and chief executive officer, Cascades Inc.,said. “Changes in raw material prices were positive on a consolidated basis both sequentially and year-over-year, while higher transportation costs negatively impacted profitability in our North American operations.”
Year-over-year, first quarter results were supported by a strong performance from the company’s European boxboard subsidiary, Reno de Medici, driven by strong market conditions, selling price improvement and lower raw material costs, Plourde said. The containerboard packaging division similarly generated stronger results, reflecting the April 2017 consolidation of the Greenpac Mill, strong industry fundamentals and higher average realized selling prices.
“The tissue papers division increased shipments by seven per cent year-over-year within the ongoing context of challenging market conditions and market related downtime taken at the beginning of the year. Results in this segment, however, were impacted by lower average selling prices driven by increased competitiveness in several markets, higher raw material prices, and negative operating margin related to the Oregon converting facility that was started in the second quarter of 2017.
“On the strategic front, the construction of our new containerboard converting facility in New Jersey progressed on time and on budget, with start-up scheduled for the end of May. The containerboard division finalized the sale of the New York converting facility for U.S. $72 million in January, and the acquisition of the 66.67 per cent interest in the Italian boxboard processing company PAC Service S.p.A, was concluded by the European boxboard division at the beginning of the year.”
Near-Term and Strategic Outlook
Discussing the outlook for Cascades, Plourde said, “Our near term outlook is positive. The second quarter is seasonally favourable for all of our business segments, and we would expect sales levels to reflect as much. In the case of our containerboard segment, strong industry demand, lower raw material costs, and the gradual implementation of the announced price increases should provide significant support for performance in the coming months. Conversely, we expect profitability levels in our tissue paper division to remain under pressure as a result of the heightened competitive marketplace and rising raw material costs. While external factors remain challenging in this segment, we remain focused on managing inventory, growing sales levels in our targeted markets, incorporating lower cost materials in our production processes when possible, and increasing sales levels in our Oregon tissue converting facility where we continue to make positive and measurable progress. In Europe , underlying industry fundamentals suggest continued strength, raw material prices continue to be favourable, and both order backlog and order intake levels remain healthy. Operationally, we will concentrate on managing raw material costs and countering the trend of increasing transportation costs through optimization of our transport strategies.
“Looking to the remainder of 2018, we are focused internally on the optimization of our new business platform, and monetizing the efficiency, productivity and cost-saving initiatives that have been implemented through the centralization of our administrative processes. At the corporate level, attention will be centered on the smooth and successful execution of the company’s planned 2018 investment program focused on improving our tissue platform, reinforcing our operational efficiency and productivity with a view to enhancing profitability and maximizing cash flow generation, and maintaining our strategic capital allocation commitment to reduce leverage.”
The full first-quarter report can be read here.