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Cascades "cautiously optimistic" following year-end results


March 2, 2009
By Pulp & Paper Canada

Quebec-based cardboard and tissue producer, Cascades Inc., says with the demand for its retail and food packaging p…

Quebec-based cardboard and tissue producer, Cascades Inc., says with the demand for its retail and food packaging products expected to grow, it will be able to weather the impact of an economic recession.

Last week, Cascades Inc. reported a fourth-quarter loss of $19 million, equal to 20 cents a share, compared to a $12 million profit, or 12 cents a share, last year. Sales during the quarter were up from $937 million to $1.02 billion.

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For the full year, Cascades Inc. reported a $55 million net loss, equal to 56 cents a share, compared to net earnings of $95 million, or 95 cents per share, in 2007. Annual sales increased to $4.02 billion in 2008 from $3.93 billion in 2007.

In a press release, Cascades president and CEO Alain Lemaire said the company finished 2008 on a positive note, despite difficult economic conditions.

“In 2008, we were confronted with very challenging business conditions throughout the year including in particular, a severe economic downturn in latter half of the fourth quarter. However, despite of all these factors, we reported positive annual net earnings and relatively stable cash flow from operations excluding specific items,” Lemaire said, adding Cascades’ restructuring initiatives in the boxboard division and the depreciation of the Canadian dollar helped offset weak demand in some of their sectors.

“We are also fortunate that our balanced portfolio of assets helps to mitigate the impact of a cyclical slowdown as demonstrated in the fourth quarter where the drop of volumes in our packaging operations was offset by record quarterly results in our Tissue Papers Group due in part to strong demand for recycled products,” Lemaire continued.

As for the future, demand for retail and food packaging products are among the reasons Cascades Inc. remains “cautiously optimistic” for 2009.

“In fact, we expect to continue benefiting from relatively stable recycled fibre and energy costs, from the lower Canadian dollar, and from our significant position in consumer markets such as tissue papers and food packaging, which are proving to be more recession resistant. Also, following a weak month of December for our packaging operations, business conditions improved slightly in January,” Lemaire said. “On the financial front, notwithstanding our increased liquidity and the recently announced amendment of our credit agreement, we will continue to carefully manage our cash flows to preserve financial flexibility in the face of economic uncertainty.”


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