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Press release from CNW Group

Cascades reports improved results for the first quarter of 2012

Thursday, May 10, 2012

Cascades reports improved results for the first quarter of 201206:00 EDT Thursday, May 10, 2012KINGSEY FALLS, QC, May 10, 2012 /CNW Telbec/ - Cascades Inc. (TSX: CAS), a leader in the recovery and manufacturing of green packaging and tissue paper products, announces its financial results for the three-month period ended March 31, 2012.Q1-2012 Financial HighlightsSales of $891 million(compared to $913 million in Q4-2011 (-2%) and $774 million in Q1-2011 (+15%))Excluding specific itemsEBITDA of $72 million(compared to $51 million in Q4-2011 (+41%) and $37 million in Q1-2011 (+95%))Net earnings per share of $0.04(compared to a net loss of $0.04 in Q4-2011 and net earnings of $0.01 in Q1-2011)Including specific itemsEBITDA of $75 million(compared to $37 million in Q4-2011 (+103%) and $30 million in Q1-2011 (+150%))Net earnings per share of $0.06(compared to net earnings of $0.05 in Q4-2011 and a net loss of $0.08 in Q1-2011)Net debt of $1,524 million (compared to $1,485 million as at December 31, 2011), including $173 million of non-recourse debt.Strategic InitiativesAcquisition of the corrugated boxes converting and warehousing facilities of Bird Packaging Limited located in Ontario.Announcement of investments of $30 million and closures of three plants as part of the consolidation of our corrugated products sector in Ontario.Consolidation of our honeycomb packaging manufacturing operations with the announced closure of Cascades Enviropac in Toronto.Announcement of the closure of the Trenton containerboard mill effective June 1, 2012 due to financial losses and unsatisfactory labor relations.Commenting on the first quarter results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "We announce today financial results which are a significant improvement over the previous quarter and the same period last year. This performance is below our expectations due to a low level of productivity of our Containerboard manufacturing operations. Our Tissue Papers Group continues to perform well and our Specialty Products Group shows improved results. During this past quarter, we benefited from lower recycled fibre costs and average selling prices have held for most of our products despite volatile demand. Continuing to implement our action plan, we have been particularly active with restructuring and capital allocation measures aimed at modernizing our operating units. The actions taken by our team reflect our commitment to improve profitability and efficiency in an increasingly competitive market."Looking ahead in the near-term, Mr. Lemaire added: "The economic environment remains difficult but seems to be gaining momentum in North America which is encouraging as we enter what have been historically our two strongest quarters of the year. We have identified and fixed certain of our operational issues which should enable operations to produce in line with usual standards. Moreover we are starting to see the benefits of the measures we have taken to improve our portfolio of assets, a good example being the Tissue Papers Group. In Europe, the economic uncertainty poses unique challenges in the short term but we believe we have the right platform to face this situation.We will likely continue to face high variable costs and a strong Canadian dollar. After a slight increase in the beginning of the year, we expect the pricing environment for recycled fibre to be more favorable during the next quarter."Financial SummarySelected consolidated information   (in millions of Canadian dollars, except amounts per share) (unaudited)Q1/2012Q1/2011Q4/2011    Sales891774913Excluding specific items 1    Operating income before depreciation and amortization (OIBD or EBITDA)723751 Operating income261- Net earnings (loss)41(4)  per common share$0.04$0.01$(0.04) Cash flow from continuing operations (adjusted)481540As reported    Operating income before depreciation and amortization (OIBD or EBITDA)753037 Operating income (loss)29(6)(14) Net earnings (loss)6(8)5  per common share$0.06$(0.08)$0.05 Cash flow from continuing operations (adjusted) 481535Note 1 - see the supplemental information on non-IFRS measures.Results analysis for the three-month period ended March 31, 2012 (compared to the previous year)In comparison with the same period last year, sales rose by 15% to $891 million as of result of higher selling prices, the net contribution of business acquisitions over divestitures and the full consolidation of the results of Reno de Medici ("RdM") since Q2-2011 that more than offset lower volumes.The above-mentioned factors combined with lower raw material costs resulted in operating income, excluding specific items, amounting to $26 million compared to $1 million in Q1-2011. On a segmented basis, our Containerboard sector posted similar profitability. Our Tissue Papers and Specialty Products sectors surpassed 2011 first quarter's results due to improved productivity and lower recycled fiber costs. Our Boxboard sector in Europe benefited from the full consolidation from RdM since Q2-2011. When including specific items, the operating income amounted to $29 million in comparison to a loss of $6 million in the same period of last year.In the first quarter of 2012, these specific items impacted our operating income and/or net earnings (before tax):a $2 million unrealized gain on financial instruments (impact on operating income and net earnings);a $1 million gain on disposal and others (operating income and net earnings);a $2 million foreign exchange gain on long-term debt and financial instruments (net earnings);a $2 million after-tax loss included in discontinued operations (net earnings).For further details, see the two following tables on IFRS and non-IFRS measures reconciliation included herewith.Net earnings excluding specific items amounted to $4 million ($0.04 per share) in the first quarter of 2012 compared to net earnings of $1 million ($0.01 per share) for the same period of last year. Including specific items, net earnings amounted to $6 million ($0.06 per share) compared to a loss of $8 million ($0.08 per share) for the same quarter in 2011.Results analysis for the three-month period ended March 31, 2012 (compared to the previous quarter)In comparison to the previous quarter, sales decreased slightly mostly due the impact of lower average selling prices caused by a less favorable product mix and the appreciation of the Canadian dollar. Despite lower sales, operating income and net earnings improved primarily due to lower fibre costs that more than offset a decrease in average selling prices and higher energy costs.Net debt increased by $39 million to $1,524 million as a result of capital investments and a build-up in working capital. Of this amount, $173 million is non-recourseDividend on common shares and normal course issuer bidThe Board of Directors of Cascades declared a quarterly dividend of $0.04 per share to be paid June 7, 2012 to shareholders of record at the close of business on May 25, 2012. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada).In the first quarter of 2012, Cascades purchased for cancellation 512,200 shares at an average price of $4.34 representing an aggregate amount of approximately $2.2 million.Supplemental information on non-IFRS measuresOperating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income and cash flow from operations are not measures of performance under IFRS. The Corporation includes operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income and cash flow from operations because they are measures used by management to assess the operating and financial performance of the Corporation's operating segments. Additionally, the Corporation believes that these items provide additional measures often used by investors to assess a company's operating performance and its ability to meet debt service requirements. However, operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income and cash flow from operations do not represent, and should not be used as a substitute for net earnings or cash flows from operating activities as determined in accordance with IFRS, and they are not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. In addition, our definition of operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income and cash flow from operations may differ from those of other companies. Cash flow from operations is defined as cash flow from operating activities as determined in accordance with IFRS excluding the change in working capital components.Operating income before depreciation and amortization excluding specific items, earnings before interests, taxes, depreciation and amortization excluding specific items, operating income excluding specific items, net earnings excluding specific items, net earnings per common share excluding specific items and cash flow from operations excluding specific items are non-IFRS measures. The Corporation believes that it is useful for investors to be aware of specific items that have adversely or positively affected its IFRS measures, and that the above mentioned non-IFRS measures provide investors with a measure of performance  with which to compare its results between periods without regard to these specific items. The Corporation's measures excluding specific items have no standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation.Specific items are defined to include charges for impairment of assets, charges for facility or machine closures, debt restructuring charges, gains or losses on sale of business unit, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non-recurring nature.Net earnings (loss), which is a performance measure defined by IFRS is reconciled below to operating income (loss), operating income excluding specific items and operating income before depreciation excluding specific items or earnings before interests, taxes, depreciation and amortization excluding specific items:    (in millions of Canadian dollars) (unaudited)Q1/2012Q1/2011Q4/2011    Net earnings (loss)6(8)5Net loss (earnings) from discontinued operations2(6)(1)Non-controlling interest(1)--Share of results of associates and joint ventures(2)(8)(3)Provision for (recovery of) income taxes1(14)(31)Foreign exchange loss (gain) on long-term debt and financial instruments(2)5(9)Financing expense252525    Operating income (loss)29(6)(14)Specific items :   Inventory adjustment resulting from business acquisition--4Loss (gain) on acquisitions, disposals and others(1)1(38)Impairment charges-144Closure and restructuring costs-33Unrealized loss (gain) on financial instruments(2)21 (3)714    Operating income - excluding specific items261-Depreciation and amortization463651Operating income before depreciation and amortization (OIBD or EBITDA) - excluding specific items723751The following table reconciles net earnings (loss) and net earnings (loss) per share to net earnings (loss) excluding specific items and net earnings (loss) per share excluding specific items:    (in millions of Canadian dollars, except amounts per share) (unaudited)Net earnings (loss) Net earnings (loss) per share 1 Q1/2012Q1/2011Q4/2011 Q1/2012Q1/2011Q4/2011        As per IFRS6(8)5 $0.06$(0.08)$0.05Specific items :       Inventory adjustment resulting from business acquisition--4 $ -$ -$0.04Loss (gain) on acquisitions, disposals and others(1)1(38) $(0.01)$0.01$(0.40)Impairment charges-144 $ -$0.01$0.34Closure and restructuring costs-33 $ -$0.02$0.02Unrealized loss (gain) on financial instruments(2)21 $(0.01)$0.02$0.01Foreign exchange loss (gain) on long-term debt and financial instruments(2)5(9) $(0.02)$0.04$(0.08)Share of results of associates, joint ventures and non-controlling interest--(2) $ -$ -$(0.02)Included in discontinued operations, net of tax2(1)(1) $0.02$(0.01)$ -Tax effect on specific items and other tax adjustments1(2)(11)     (2)9(9) $(0.02)$0.09$(0.09)Excluding specific items41(4) $0.04$0.01$(0.04) Note 1 - specific amounts per share are calculated on an after-tax basis.The following table reconciles cash flow provided by (used from) operating activities to cash flow (adjusted) from operations excluding specific items:   Cash flow fromoperations(in millions of Canadian dollars) (unaudited)Q1/2012Q1/2011Q4/2011    Cash flow provided by (used from) operating activities24(12)102Changes in non-cash working capital components2427(67)Cash flow (adjusted) from operations481535Specific items, net of current income tax   Closure and restructuring costs--5Excluding specific items481540CONSOLIDATED BALANCE SHEETS(in millions of Canadian dollars) (unaudited)March 31,2012December 31,2011Assets  Current assets  Cash and cash equivalents1112Cash reserved for business aquisition114-Accounts receivable553535Current income tax assets2524Inventories530516Financial assets306Assets held for sale1112 1,1741,105Long-term assets  Investments in associates and joint ventures243219Property, plant and equipment1,6891,703Intangible assets185185Financial assets1225Other assets4544Deferred income tax assets122119Goodwill and others329328 3,7993,728Liabilities and Equity  Current liabilities  Bank loans and advances9790Trade and other payables545539Current income tax liabilities32Current portion of provisions for contingencies and charges25Current portion of financial liabilities and other liabilities8320Current portion of long-term debt5649 786705Long-term liabilities  Long-term debt1,3961,358Provisions for contingencies and charges3533Financial liabilities61111Other liabilities258249Deferred income tax liabilities105107 2,6412,563Equity attributable to Shareholders  Capital stock483486Contributed surplus1514Retained earnings608615Accumulated other comprehensive loss(82)(86) 1,0241,029Non-controlling interest134136Total equity1,1581,165 3,7993,7281  As of March 31, 2012, $14 million of cash is reserved for the acquisition of Bird Packaging Limited closed on April 1, 2012.CONSOLIDATED STATEMENT OF EARNINGSFor the 3-month periods ended March 31,(in millions of Canadian dollars, except per share amounts and number of shares) (unaudited)20122011Sales891774Cost of sales and expenses  Cost of sales (including depreciation and amortization of $46 million; 2011-$36 million)770697Selling and administrative expenses9477Loss (gain) on disposals and others(1)1Impairment charges and restructuring costs-4Foreign exchange loss1-Loss (gain) on derivative financial instruments(2)1 862780Operating income (loss)29(6)Financing expense2525Foreign exchange loss (gain) on long-term debt and financial instruments(2)5Profit (loss) before income taxes6(36)Provision for (recovery of) income taxes1(14)Share of results of associates and joint ventures(2)(8)Net earnings (loss) from continuing operations including non-controlling interest for the period7(14)Net earnings (loss) from discontinued operations for the period(2)6Net earnings (loss) including non-controlling interest for the period5(8)Net loss attributable to non-controlling interest(1)-Net earnings (loss) attributable to Shareholders for the period6(8)Net earnings (loss) from continuing operations per common share   Basic$0.08($0.15) Diluted$0.08($0.15)Net earnings (loss) per common share   Basic$0.06($0.08) Diluted$0.06($0.08)Weighted average basic number of common shares outstanding94,497,76696,606,421   Net earnings (loss) attributable to Shareholders:   Continuing operations8(14) Discontinued operations(2)6Net earnings (loss)6(8)CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS For the 3-month periods ended March 31,(in millions of Canadian dollars)(unaudited)20122011Net earnings (loss) including non-controlling interest for the period5(8)Other comprehensive income (loss)   Translation adjustments    Change in foreign currency translation of foreign subsidiaries(5)(9)  Change in foreign currency translation related to net investment hedging activities815  Income taxes(1)(2) Cash flow hedges    Change in fair value of foreign exchange forward contracts5(1)  Change in fair value of interest rate swaps31  Change in fair value of commodity derivative financial instruments(2)4  Income taxes(3)(1) Actuarial loss on post-employment benefit obligations(14)-  Income taxes4- Available-for-sale financial assets(1)-Other comprehensive income (loss)(6)7Comprehensive loss including non-controlling interest for the period(1)(1)Comprehensive income (loss) attributable to non-controlling interest for the period(1)-Comprehensive income (loss) attributable to Shareholders for the period-(1)   Comprehensive income (loss) attributable to Shareholders:   Continuing operations2(7) Discontinued operations(2)6Comprehensive income (loss)-(1)CONSOLIDATED STATEMENTS OF EQUITY   For the 3-month period ended March 31, 2012(in millions of Canadian dollars)(unaudited)CapitalstockContributedsurplusRetainedearningsAccumulatedothercomprehensivelossTotal equityattributable toShareholdersNon-controllinginterestTotalequityBalance—Beginning of period48614615(86)1,0291361,165Comprehensive income (loss)        Net earnings (loss)--6-6(1)5 Other comprehensive income (loss)--(10)4(6)-(6) --(4)4-(1)(1)Dividends--(4)-(4)-(4)Redemption of common shares(3)1--(2)-(2)Acquisition of non-controlling interest--1-1(1)-Balance—End of period48315608(82)1,0241341,158         For the 3-month period ended March 31, 2011(in millions of Canadian dollars)(unaudited)CapitalstockContributedsurplusRetainedearningsAccumulatedothercomprehensivelossTotal equityattributable toShareholdersNon-controllinginterestTotalequityBalance—Beginning of period49614576(37)1,049231,072Comprehensive income (loss)        Net loss--(8)-(8)-(8) Other comprehensive income---77-7 --(8)7(1)-(1)Dividends--(4)-(4)-(4)Stock options-(1)--(1)-(1)Redemption of common shares(1)---(1)-(1)Balance—End of period49513564(30)1,042231,065CONSOLIDATED STATEMENTS OF CASH FLOWS For the 3-month periods ended March 31,(in millions of Canadian dollars)(unaudited)20122011Operating activities from continuing operations  Net earnings (loss) attributable to Shareholders for the period6(8)Net loss (earnings) from discontinued operations for the period2(6)Net earnings (loss) from continuing operations8(14)Adjustments for   Financing expense2525 Depreciation and amortization4636 Loss (gain) on disposals and others(1)1 Impairment charges and restructuring costs-4 Loss (gain) on derivative financial instruments(2)2 Foreign exchange loss (gain) on long-term debt and financial instruments(2)5 Provision for (recovery of) income taxes1(14) Share of results of associates and joint ventures(2)(8) Non-controlling interest(1)- Net financing expense paid(15)(17) Income taxes paid(4)(3) Others(5)(2) 4815Changes in non-cash working capital components(24)(27) 24(12)Investing activities from continuing operations  Purchase of investments in associates and joint ventures(19)(2)Purchase of property, plant and equipment(48)(35)Proceeds on disposal of property, plant and equipment5-Cash reserved for business acquisition(14)-Change in other assets(4)(8) (80)(45)Financing activities from continuing operations  Bank loans and advances64Change in revolving credit facilities8151Purchase of senior notes(3)-Payments of other long-term debt(23)(2)Redemption of common shares(2)(1)Dividends paid to Corporation's Shareholders(4)(4) 5548Change in cash and cash equivalents during the period from continuing operations(1)(9)Change in cash and cash equivalents from discontinued operations, including proceeds on disposal during the period-13Net change in cash and cash equivalents during the period(1)4Cash and cash equivalents—Beginning of period126Cash and cash equivalents—End of period1110SEGMENTED INFORMATIONIn 2012, the Corporation changed the structure of its internal organization in a manner that caused the composition of its reportable segment to change. As a result, the Corporation modified its segmented information disclosure for the current period and restated prior periods. Containerboard and Boxboard North America manufacturing and converting are now presented within one segment. Boxboard European activities are reported as a separate segment.The Corporation's operations are managed in four segments: Containerboard, Boxboard Europe, Specialty Products (which consists of the packaging products of the Corporation) and Tissue Papers. SALESFor the 3-month periods ended March 31,(in millions of Canadian dollars)(unaudited)20122011Packaging Products   Containerboard284344 Boxboard Europe20462 Specialty Products202202 Intersegment sales(18)(27) 672581Tissue Papers229199Intersegment sales and others(10)(6)Total891774    OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATIONFor the 3-month periods ended March 31,(in millions of Canadian dollars)(unaudited)20122011Packaging Products   Containerboard2413 Boxboard Europe134 Specialty Products117 4824Tissue Papers3310Corporate(6)(4)Operating income before depreciation and amortization7530Depreciation and amortization(46)(36)Financing expense(25)(25)Foreign exchange (loss) gain on long-term debt and financial instruments2(5)Profit (loss) before income taxes6(36)    PURCHASE OF PROPERTY, PLANT AND EQUIPMENTFor the 3-month periods ended March 31,(in millions of Canadian dollars)(unaudited)20122011Packaging Products   Containerboard148 Boxboard Europe51 Specialty Products36 2215Tissue Papers86Corporate32Total purchases3323Proceeds on disposal of property, plant and equipment(5)- 2823Purchase of property, plant and equipment included in trade and other payables   Beginning of period2518 End of period(10)(6)Purchases of property, plant and equipment net of proceeds on disposals4335Founded 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.Certain statements in this release, including statements regarding future results and performance, are forward-looking statements (as such term is defined under the Private Securities Litigation Reform Act of 1995) based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation's products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in the Corporation's Securities and Exchange Commission filings.    For further information: Media Hubert Bolduc Vice-President, Communications and Public Affairs 514 912-3790 Investors Riko Gaudreault Director, Investor relations 514 282-2697 Source: Allan Hogg Vice-President and Chief Financial Officer