© Piman Khrutmuang - stock.adobe.com
Cascades Inc., Kingsey Falls, Quebec, has reported a slight decrease in earnings compared with the prior quarter. For the first quarter of the year, Cascades achieved sales of $1,182 million compared with $1,242 million in the fourth quarter of the year and $1,265 million in the first quarter of last year.
According to Cascades’ Q1 earnings report, operating income for the quarter was at $52 million compared with $113 million in the fourth quarter of 2020 and $87 million in the first quarter of 2020. Operating income before depreciation and amortization (OIBD) was at $128 million for the first quarter of the year compared with $183 million in the fourth quarter of 2020 and $157 million in the first quarter of 2020.
The company reports that the decrease has been driven by decreased retail tissue demand.
“Our first-quarter consolidated results highlight the dynamic and challenging business environment in view of the ongoing COVID-19 pandemic,” says Mario Plourde, president and CEO of Cascades. “The sequential decrease in our results was largely driven by an important contraction in retail tissue demand as customers worked through high inventory levels built up throughout 2020 and continued lower volumes in away-from-home.
He continues, “Tissue volumes were also impacted by inclement weather in the quarter, which resulted in lost production in one of the corporation’s Southern U.S. tissue plants.”
Cascades reports that its net debt was at $1,654 million as of March 31 compared with $1,679 million as of Dec. 31, 2020. For the first quarter, total capital expenditures, net of disposals, were at $78 million compared with $37 million in the fourth quarter of 2020 and $73 million in the first quarter of 2020. The company forecasts capital expenditures to be between $450 million and $475 million in 2021, including $250 million for the Bear Island containerboard conversion project in Virginia.
“Our Bear Island conversion project is advancing on and on budget.” -- Mario Plourde, president and CEO, Cascades
“Our Bear Island conversion project is advancing on and on budget,” Plourde states in the company’s earnings report. “More broadly speaking, we are focused on advancing our Bear Island containerboard project and finalizing modernization investments in our tissue converting operations. These investments will be fully funded by projected operational cash flows for the year.”
Cascades reports its European Boxboard segment generated strong sequential sales growth in the first quarter. Plourde says the sales growth was offset by an increase in raw material prices and higher energy costs in the period.
Plourde says, “The European Boxboard segment is expected to close its acquisition of Papelera del Principado S.A. at the end of June 2021. We continued to focus on our margin improvement program, with these initiatives expected to contribute 1 percent annually to our consolidated adjusted OIBD level based on our 2019 reference year.”
Plourde concludes that the company remains “cautiously optimistic” for its near-term future performance. He says, “Sequential results from our Tissue business are expected to remain stable, with performance over the longer term expected to improve as consumer tissue demand normalizes once inventories are rebalanced, away-from-home demand increases as the economy and businesses reopen and benefits are realized from the high single-digit price increase announced for consumer and away-from-home tissue products beginning in the third quarter. We expect near-term Containerboard performance to reflect good demand and cumulative benefits from announced price increases, counterbalanced by raw material price inflation and planned maintenance downtime at our two Niagara Falls facilities in the second quarter. Near-term results for the Specialty Products are forecasted to remain stable sequentially, with higher volume and average selling prices offsetting slightly higher raw material costs. Lastly, sequential performance from the European Boxboard segment is expected to remain stable as good volumes and higher average selling price as a result of announced price increases should mitigate higher raw material costs.”