Cascades swings to Q1 net loss of C$8M from restated net income of C$3M in year-ago period; sales up 2.6% year-over-year to C$914M, with lower average selling prices more than offet by net impact of acquisitions over divestitures, closures
Debra Garcia
KINGSEY FALLS, Quebec
,
May 9, 2013
(press release)
–
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, 2013.
Including specific items Net debt of $1,581 million (compared to $1,535 million as at December 31, 2012), including $139 million of non-recourse debt Completion of succession plan with Mr. Mario Plourde named as President and Chief Executive Officer
Q1-2013 Highlights
Sales of $914 million (compared to $904 million in Q4-2012 (+1%) and $891 million in Q1-2012 (+3%))
Excluding specific items
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* 2012 figures have been restated following the new IFRS standard IAS19 - Employee benefits
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Mr. Alain Lemaire, Executive Chairman of the Board, had the following comments on the first quarter results:
"As we expected, the first quarter of 2013 was similar to what we experienced towards the end of 2012. This quarter was marked by weaker results in the Tissue Papers sector and a negative contribution from our boxboard activities in North America that offset the benefits from improved productivity and price increases in our containerboard activities.
On a segmented basis, maintenance expenses and lower average prices due to increased promotional activities in Canada and increased competition in the US affected our Tissue Papers sector. On the Containerboard front, the operating rate of our containerboard mills has improved during the first quarter. However the current weakness of the Canadian economy impacted our corrugated product business as order levels in Eastern Canada were lower than expected. This Group was also impacted by the production of lower margin products by our boxboard manufacturing mills in North America. In Europe, lower energy prices and higher volumes more than offset the impact of lower selling prices. As for fiber, costs for brown grades and virgin pulp were higher than during the previous quarter which also impacted our results."
Financial Summary
Segmented OIBD excluding specific items
(in millions of Canadian dollars)
Q1/2013
Q1/2012
Q4/2012
Packaging Products
Containerboard
25
21
25
Boxboard Europe
11
13
11
Specialty Products
11
11
8
Tissue Papers
29
33
31
Corporate Activities
(8)
(6)
(5)
OIBD excluding specific items
68
72
70
Selected consolidated information
(in millions of Canadian dollars, except amounts per share)
Q1/2013
Q1/2012
Q4/2012
Sales
914
891
904
Excluding specific items 1
Operating income before depreciation and amortization (OIBD or EBITDA)
68
72
70
Operating income
24
26
22
Net earnings (loss) 2
(4)
1
(5)
per common share 2
$(0.04)
$0.01
$(0.06)
Cash flow from continuing operations (adjusted)
46
48
35
Margin (OIBD or EBITDA)
7.4%
8.1%
7.7%
As reported
Operating income before depreciation and amortization (OIBD or EBITDA)
64
75
39
Operating income (loss)
20
29
(19)
Net earnings (loss) 2
(8)
3
(32)
per common share 2
$(0.09)
$0.03
$(0.33)
Cash flow from continuing operations (adjusted)
46
48
34
Note 1 - see the supplemental information on non-IFRS measures.
Note 2 - 2012 figures have been restated following the new IFRS standard IAS19 - Employee benefits
Results analysis for the three-month period ended March 31, 2013 (compared to the same period last year)
In comparison with the same period last year, sales increased by 3% to $914 million as of result of higher volumes, the net impact of business acquisitions over divestitures and closures and favorable exchange rates which more than offset lower average selling prices.
Operating income, excluding specific items, decreased from $26 million during Q1-2012 to $24 million for the first quarter of 2013 mainly as a result of lower selling prices which negated lower raw material costs and higher volume contribution. Compared to the first quarter of 2012, the operating income for our Boxboard Europe and Tissue Papers sectors was lower. Our Containerboard Group improved its operating income while our Specialty Products Group showed stable results. Finally, the costs related to corporate activities increased due to the fact that costs related to the implementation of our new ERP system are no longer capitalized.
When including specific items, operating income amounted to $20 million in comparison to $29 million for the same period of last year. In the first quarter of 2013, the following specific items impacted our operating income and/or net earnings (before tax):
The net loss excluding specific items amounted to $4 million ($0.04 per share) in the first quarter of 2013 compared to net earnings of $1 million ($0.01 per share) for the same period in 2012. Including specific items, the net loss amounted to $8 million ($0.09 per share) compared to net earnings of $3 million ($0.03 per share) for the same quarter in 2012.
Results analysis for the three-month period ended March 31, 2013 (compared to the previous quarter)
In comparison to the previous quarter, sales increased by 1% to reach $914 million. A favorable foreign exchange rate and higher shipments counterbalanced lower average selling prices. Excluding specific items, operating income increased by $2 million to reach $24 million. The same factors which explain the increase in sales combined with lower energy costs more than offset an increase in raw material costs and higher corporate expenses related to the ERP investment. The net loss for the first quarter of 2013 was $4 million compared to a net loss of $5 million during the previous quarter.
Net debt increased by $46 million to $1,581 million due to the exchange rate and seasonal working capital requirements.
For further details, see the following tables on IFRS and non-IFRS measures reconciliation included herewith.
Near-term outlook
In commenting on the outlook, Mr. Lemaire added: "We expect the strategic initiatives we undertook in 2012 to translate into a better performance in 2013, mostly in the second half of the year. In the short term, our Containerboard sector should perform better due to seasonality and improved productivity. Furthermore, the price hike announced in Q4-2012 has been fully implemented and will be reflected for a full quarter in the second quarter. In addition, the current market environment leads us to believe that the second price increase will be successful. The Greenpac mill is expected to start production early in the third quarter. Within the current market conditions and depending on the progress of the start-up, the results of the mill should begin to have a positive impact on our earnings per share by the end of the year. Despite a challenging environment, our Tissue Papers Group should slightly improve its performance. In Europe, our backlogs haven't been that healthy since 2011 and the recent price increase announcement for certain products bodes well for the future. "
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 6, 2013 to shareholders of record at the close of business on May 24, 2013. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada).
In the first quarter of 2013, Cascades purchased for cancellation 20,300 shares at an average price of $4.54 representing an aggregate amount of approximately $0.1 million.
Conference call information
Management will comment the 2013 first quarter financial results during a conference call to be held today at 2:00pm.
Financial analysts, investors, media and other interested individuals are invited to listen to the conference call by dialing 1-888-231-8191. The conference call, including the investor presentation, will also be broadcast live on the Cascades corporate website (www.cascades.com, tab Investors of the Home page). The broadcast replay will be available on the Cascades corporate website and by phone until May 17, 2013 by dialing 1-855-859-2056 and by using access code 30143221#.
Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. The Corporation employs more than 12,000 employees, who work in more than 100 units located in North America and Europe. With its management philosophy, half a century of experience in recycling, and continuous efforts in research and development as driving forces, Cascades continues to serve its clients with innovative products. Cascades' shares trade on the Toronto Stock Exchange, under the ticker symbol CAS.
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