Consumables

Cascades releases 2013 fourth quarter results and ends the year on a strong note

Thursday 20. March 2014 - Cascades Inc. (TSX: CAS), a leader in the recovery and manufacturing of green packaging and tissue paper products, announces its unaudited financial results for the three-month period and the fiscal year ended December 31, 2013.

Annual Highlights
Sales of $3,849 million (compared to $3,645 million in 2012 (+6%))
Excluding specific items
EBITDA of $352 million (compared to $304 million in 2012 (+16%))
Net earnings per share of $0.31 (compared to $0.05 in 2012)
Including specific items
EBITDA of $322 million (compared to $274 million in 2012 (+18%))
Net earnings per share of $0.11 (compared to a net loss of $0.23 in 2012)
Appointment of Mario Plourde as President and Chief Executive Officer
Increased ownership in Reno de Medici from 48.5% to 57.6%
Successful start-up of the Greenpac containerboard mill and ramp-up according to plan
Acquisition and conversion of a paper machine at our Oregon Tissue mill with a start-up planned for the end of 2014
Creation of a new joint venture in the Atlantic Provinces for the Containerboard Group
Q4 2013 Highlights
Sales of $958 million
(compared to $995 million in Q3 2013 (-4%) and $904 million in Q4 2012 (+6%))
Excluding specific items
EBITDA of $105 million
(compared to $96 million in Q3 2013 (+9%) and $70 million in Q4 2012 (+50%))
Net earnings per share of $0.19
(compared to net earnings of $0.07 in Q3 2013 and a net loss of $0.06 in Q4 2012)
Including specific items
EBITDA of $93 million
(compared to $83 million in Q3 2013 (+12%) and $39 million in Q4 2012 (+138%))
Net earnings per share of $0.05
(compared to net earnings of $0.12 in Q3 2013 and a net loss of $0.33 in Q4 2012)
Net debt of $1,612 million (compared to $1,601 million as at September 30, 2013), including $113 million of non-recourse net debt
————————————————————————
Mr. Mario Plourde, President and Chief Executive Officer, had the following comments on the fourth quarter results: “We are pleased with the 16% improvement of our EBITDA excluding specific items in 2013 which demonstrates that the efforts being pursued under our action plan continue to bear fruit. The results of the last quarter of the year have been solid as a result of improved productivity and more favourable external factors such as a weaker Canadian dollar.
Having significantly increased its EBITDA contribution during the fourth quarter, our Containerboard Group continued to show progress due to an improvement in manufacturing efficiencies. Results were also impacted by a favourable adjustment to its pension liabilities. Our Boxboard Europe Group achieved the greatest EBITDA growth during the fourth quarter. It continues to do well in a difficult environment and has benefited from credits linked to energy savings projects undertaken at two of its mills. Impacted by favourable exchange rates, the Specialty Products Group’s results were stable compared to the previous quarter, even though the fourth quarter is usually a slower quarter. Finally, our Tissue Papers Group recorded a seasonal EBITDA decrease as it did last year and it continues to face a very competitive environment while new capacity is being absorbed by the market.
While facing normal logistical challenges associated with start-ups, the Greenpac mill is continuing to ramp-up as planned. Average daily production during the fourth quarter was 747 tons per day, without adjusting for downtime, and operating income before depreciation was positive for the quarter.”
Results analysis for the three-month period ended December 31, 2013 (compared to the same period last year)
In comparison with the same period last year, sales increased by 6% to $958 million in the fourth quarter of 2013 due to favourable exchange rates, an increase in shipments and higher average selling prices.
Operating income, excluding specific items, increased significantly from $22 million in Q4 2012 to $57 million for the fourth quarter of 2013.  In addition to the above-mentioned factors, lower energy costs and the contribution from businesses acquired and restructuring actions positively contributed to results and offset the negative impacts of higher raw materials costs, essentially linked to external purchases of paper. Compared to the last quarter of the previous year, our three groups active in the Packaging Products sector registered significant improvement in operating income. Higher shipments, lower production costs and lower depreciation expense  contributed to improve our Containerboard Group’s operating income. Also, the Group benefited from a decrease in post-employment benefits obligations. Energy credits strongly contributed to the increase of the operating income of our Boxboard Europe Group while our Specialty Products Group benefited from lower production costs. As for our Tissue Papers Group, it recordedslightly higher operating income as a result of the weakness of the Canadian dollar. Finally, the costs related to corporate activities increased due to the continuation of the implementation of our new ERP system.
When including specific items, operating income amounted to $45 million in comparison to an operating loss of $19 million for the same period of last year. In the fourth quarter of 2013, the following specific items, before income taxes, impacted our operating income and/or net earnings:
a $7 million net impairment charge on assets of our Boxboard Europe and Specialty Products Groups for $24 million and a reversal of impairment of $17 million in our Tissue Papers segment (operating income and net earnings);
a $6 million charge related to restructuring measures (operating income and net earnings);
a $1 million unrealized gain on derivative financial instruments (operating income and net earnings).
Net earnings excluding specific items amounted to $18 million ($0.19 per share) in the fourth quarter of 2013 compared to a net loss of $5 million ($0.06 per share) for the same period in 2012. Including specific items, net earnings amounted to $6 million ($0.05 per share) compared to a net loss of $32 million ($0.33 per share) for the same quarter in 2012.
Results analysis for the three-month period ended December 31, 2013 (compared to the previous quarter)
In comparison to the previous quarter, sales decreased by 4% to reach $958 million. A decrease in shipments and lower average selling price more than offset favourable exchange rates. However, lower operating costs, energy credits and a decrease in maintenance and subcontracting costs contributed to increase operating income excluding specific items by 14% to $57 million.
Net earnings excluding specific items for the fourth quarter of 2013 were $18 million ($0.19 per share) compared to net earnings of $7 million ($0.07 per share) during the previous quarter. Net earnings for the quarter were affected by a higher income tax rate and our share of the results of our investments which now include the contribution of the Greenpac mill.
Net debt increased by $11 million to $1,612 million due to the depreciation of the Canadian dollar compared to its US counterpart.
For further details, see the tables on IFRS and non-IFRS measures reconciliation, included herewith.
Near-term outlook
In commenting on the outlook, Mr. Plourde added: “The usual year-end seasonality seems to have been delayed until January of this year and this has allowed us to finish the year on a good note due to a stronger than anticipated month of December . We are beginning 2014 with a certain seasonal slowdown and a shutdown of 14 days at our Trenton containerboard mill due to an equipment failure. Despite this, we are confident that we will increase our EBITDA and margins for a third consecutive year in 2014.
While the outlook is encouraging for most of our sectors, the tissue industry currently faces the short-term challenge of additional capacity. We do not foresee important changes in the cost of recycled fibres and we should feel the impact of the depreciation of the Canadian dollar more fully starting next quarter.
Dividend on common shares and normal course issuer bid
The Board of Directors of Cascades declared a quarterly dividend of $0.04 per share to be paid March 28, 2014 to shareholders of record at the close of business on March 24, 2014. This dividend paid by Cascades is an “eligible dividend” as per the Income Tax Act (Bill C-28, Canada).
In the fourth quarter of 2013, Cascades did not purchase shares