Consumables

Cascades releases financial results for the first quarter of 2014

Monday 12. May 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 ended March 31, 2014.

Q1 2014 Highlights
Sales of $994 million
(compared to $958 million in Q4 2013 (+4%) and $914 million in Q1 2013 (+9%))
Excluding specific items
EBITDA of $80 million
(compared to $105 million in Q4 2013 (-24%) and $68 million in Q1 2013 (+18%))
Net earnings per share of $0.01
(compared to net earnings of $0.19 in Q4 2013 and a net loss of $0.04 in Q1 2013)
Including specific items
EBITDA of $84 million
(compared to $93 million in Q4 2013 (-10%) and $64 million in Q1 2013 (+31%))
Net loss per share of $0.01
(compared to net earnings of $0.05 in Q4 2013 and a net loss of $0.09 in Q1 2013)
Net debt of $1,708 million (compared to $1,612 million as at December 31, 2013), including $120 million of non-recourse net debt.
Ramp-up of the Greenpac containerboard mill progressing as planned.
Announcement of the closure of the Djupafors mill in Sweden on June 15, 2014.
Mr. Mario Plourde, President and Chief Executive Officer, had the following comments on the first quarter results: “Exceptionally harsh weather conditions in North America resulted in higher operating costs and lower shipments. Compared to the last quarter, these factors negatively impacted our first quarter results which represent, nevertheless, an 18% EBITDA improvement compared to the same period last year. Sequentially, all our North American groups are showing lower results. The Containerboard Group suffered from a 14-day interruption of operations at its Trenton mill as a result of an equipment failure. The Specialty Products Group incurred higher energy and raw material costs. As for the Tissue Papers Group, it was also impacted by a more competitive market and a decrease in volumes in the away-from-home market and retail in Canada. On the positive side, results for the Boxboard Europe Group improved over the last quarter due to higher shipments and energy credits amounting to $5 million during the first quarter.  Finally, the productivity of the Greenpac mill continues to improve gradually and produced to capacity for a few days in April.”
In commenting on the outlook, Mr. Plourde added: “Despite the shortfall in the results for the first quarter, we are still confident in our ability to do better this year than we did in 2013. The recent decrease of recycled fibre costs confirms our views that input costs should remain reasonable. Aside from Europe where the competitive environment is expected to be challenging for recovered grades, our Packaging Products activities should continue to improve. In the tissue sector, we will face headwinds caused by additional capacity and lower demand from major retailers in the US. We are reaching new milestones at the Greenpac mill in terms of daily production peaks as we continue to gradually ramp-up the machine and logistics activities. Finally, our debt to EBITDA ratio remained relatively stable during the quarter despite a weak Canadian dollar environment and seasonal working capital requirements and should continue to improve during the course of the year. As well, the closure of our Djupafors mill announced during the quarter is a concrete illustration of our commitment to manage our portfolio of assets and improve profitability.”
Results analysis for the three-month period ended March 31, 2014 (compared to the same period last year)
In comparison with the same period last year, sales increased by 4% to $994 million as favorable exchange rates and higher average selling prices, particularly in our Containerboard Group, more than offset lower volumes for our Tissue Papers Group.
Operating income, excluding specific items, increased from $24 million in Q1 2013 to $34 million in the first quarter of 2014. The above-mentioned factors, including the energy credits in Europe, explain most of the increase in operating income. However the 14-day downtime taken at our Trenton Containerboard mill, due to a water management equipment failure, resulted in a $4 million loss during the quarter. Likewise, exceptionally harsh weather conditions prevailing in Québec, Ontario and the U.S. northeast resulted in higher operating costs, mainly energy for an estimated amount of $10 million. Finally, the cost of raw materials was higher.
When including specific items, operating income amounted to $38 million in comparison to $20 million for the same period of last year. In the first quarter of 2014, the following specific items, before income taxes, impacted our operating income and/or net earnings:
a $1 million unrealized loss on derivative financial instruments (operating income and net earnings);
a $5 million gain on a contribution to a joint venture with Maritime Paper Products Limited for our operations located in St.John’s, Newfoundland and Moncton, New Brunswick (operating income and net earnings);
a $6 million foreign exchange loss on long-term debt and financial instruments (net earnings).
Net earnings excluding specific items amounted to $1 million ($0.01 per share) in the first quarter of 2014 compared to a net loss of $4 million ($0.04 per share) for the same period in 2013. Including specific items, the net loss amounted to $1 million ($0.01 per share) in the first quarter of 2014 compared to a net loss of $8 million ($0.09 per share) in the same quarter in 2013. Net earnings for the quarter were reduced by the share of earnings attributable to the non-controlling interest in Reno De Medici as its contribution was greater than during the first quarter of 2013.
Results analysis for the three-month period ended March 31, 2014 (compared to the previous quarter)
In comparison to the previous quarter, sales increased by 9% to reach $994 million due to favorable foreign exchange rates and higher shipments, primarily in Europe. These factors were partially offset by lower average selling prices in Europe.
Operating income, excluding specific items, decreased from $57 million in Q4 2013 to $34 million in the first quarter of 2014. As mentioned above, favorable exchange rates, and higher volumes in Europe improved the operating income but were more than offset by higher operational and energy costs, lower volumes in our Tissue Papers Group and the downtime at our Trenton mill. Also, our Q4 2013 results included positive adjustments related to post-retirement liabilities for $5 million and energy credits in Europe for $6 million.
Net debt increased by $96 million to $1,708 million due to a weaker Canadian dollar, payments of investments in property, plant & equipment made at the end of 2013 and a temporary increase in accounts receivable due to the higher activity level at the end of March.
For further details, see the tables on IFRS and non-IFRS measures reconciliation, included herewith.
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 June 5, 2014 to shareholders of record at the close of business on May 26, 2014. This dividend paid by Cascades is an “eligible dividend” as per the Income Tax Act (Bill C-28, Canada).
In the first quarter of 2014, Cascades did not purchase shares.