Financial Reports & Markets
Kruger announces Q4 and year-end 2018 results, citing revenue increase amid cost challenges
By P&PC Staff
By P&PC Staff
March 7, 2019 – KP Tissue Inc. (KPT) has reported the Q4 2018 and full-year 2018 financial results of KPT and Kruger Products L.P. (KPLP), citing solid revenue amid cost challenges, but a “disappointing” year overall.
KPT holds a 15.7 per cent interest in KPLP, which represents the company’s tissue products arms for the consumer and away-from-home markets.
For KPLP’s fourth-quarter results, revenue increased by 5.7 per cent to $359.5 million in Q4 2018 compared to Q4 2017, and adjusted EBITDA was $20.3 million in Q4 2018 compared to $33.7 million in Q4 2017. Pulp and freight costs continued to escalate in the quarter.
The company completed the financing for its TAD2 project, a $575-million investment in a new tissue facility in the Brompton area of Sherbrooke, Quebec. Kruger reports the project is progressing on time and on budget.
KPLP also declared a quarterly dividend of $0.18 per share to be paid on April 15, 2019.
The year-end results saw revenue increase by 7.1 per cent to $1,370.4 million in 2018 compared to $1,280.0 million in 2017, with adjusted EBITDA at $102.3 million in 2018, down from $144.2 million in 2017.
“We are pleased by our strong revenues for the year and for reaching another record level, however high pulp prices and freight costs, prevalent throughout 2018, led to disappointing results for the year,” says Dino Bianco, CEO of KPT and KPLP. “KP Tissue’s countermeasures such as our value creation program and capital projects partially offset these higher input costs. The price increase announced last year in the Canadian consumer business will provide some relief starting in the first quarter of 2019. With the support of a third-party consultant, we are initiating an operational excellence program to better leverage our assets, which is projected to result in cost savings of between $15 and $20 million on a run-rate basis by the end of 2020.”
KPT earned net income of $2.7 million in Q4 2018. Included in the net income was $6.0 million representing KPT’s share of KPLP’s income. The income was reduced by depreciation expense of $1.5 million related to adjustments to carrying amounts on acquisition and an income tax expense of $1.9 million. KPT incurred a net loss of $0.3 million in 2018. Included in the net loss was $7.2 million representing KPT’s share of KPLP’s income. The income was reduced by depreciation expense of $5.8 million related to adjustments to carrying amounts on acquisition and income tax expense of $1.9 million.
Read the full KP Tissue financial report.