Cascades reports sales up in Q3, driven by tissue
By P&PC Staff
By P&PC Staff
November 8, 2018 – Cascades Inc. has reported its unaudited third-quarter financial results for the period ended September 30, 2018.
Sales of $1.2 billion ($1,172 million) increased by $69 million or six per cent compared to the same period last year. This was driven by a 12 per cent increase in the tissue segment, reflecting volume improvements, a more favourable sales mix, exchange rate and higher average sales prices during the period.
An eight per cent increase in the containerboard packaging division similarly benefited sales, and was driven by higher sales prices and the acquisition of Ontario converting facilities at the end of 2017. Sales generated by the European boxboard segment were up marginally compared to the prior year, as lower shipments were offset by improvements in both pricing and sales mix, and a favourable Canadian dollar/euro exchange rate. Finally, third-quarter sales in the specialty products division were below prior-year levels, reflecting the lower sales in recovery activities following the significant decrease in year-over-year prices of brown recycle fibres.
Third-quarter operating income stood at $78 million, a notable improvement from the $51 million generated last year. This increase was driven primarily by the containerboard packaging segment, where strong results reflect the improved raw material pricing environment and implementation of the industry-wide US$50/st price increase. Operating income similarly benefited from improved results generated by the European boxboard segment, reflecting lower raw material pricing and higher average selling prices.
As was the case in the second quarter, the contribution from the specialty products division decreased slightly compared to last year as a result of the impact of lower raw material prices on recovery activities. Lastly, results in the tissue division reflected higher raw material and transportation costs, the effects of which mitigated the benefits derived from a more favourable pricing and sales mix, and higher volumes.
“Strong fundamentals in containerboard packaging were the driving factor behind our solid third quarter performance,” says Mario Plourde, president and CEO of Cascades. “This was reinforced by successful margin realignment in Recovery activities, which contributed to improved quarterly earnings in specialty products. Results in the tissue division continued to be impacted by rising raw material and logistics costs, in addition to the capacity-driven competitive reality. While margins in this division were below expectations as a result of these factors and weather-related events, the solid quarterly sales performance highlights the underlying strength of our tissue platform, and supports the strategic investments being made to propel long-term competitive positioning. Finally, the European boxboard segment, via our 57.8 per cent equity position in Reno de Medici S.p.A., announced solid results in the seasonally softer third quarter that delivered a marked improvement in profitability year-over-year.”
Read the full report here.