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Press release from CNW Group

Cascades releases its 2012 third quarter results

Thursday, November 08, 2012

Cascades releases its 2012 third quarter results06:30 EST Thursday, November 08, 2012KINGSEY FALLS, QC, Nov. 8, 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 September 30, 2012.Q3-2012 Financial HighlightsSales of $906 million(compared to $944 million in Q2-2012 (-4%) and $947 million in Q3-2011 (-4%))Excluding specific itemsEBITDA of $78 million(compared to $84 million in Q2-2012 (-7%) and $79 million in Q3-2011 (-1%))Net earnings per share of $0.07(compared to net earnings of $0.08 in Q2-2012 and a net loss of $0.02 in Q3-2011)Including specific itemsEBITDA of $83 million(compared to $77 million in Q2-2012 (+8%) and $53 million in Q3-2011 (+57%))Net earnings per share of $0.05(compared to net earnings of $0.08 in Q2-2012 and a net loss of $0.21 in Q3-2011)Net debt of $1,542 million (compared to $1,585 million as at June 30, 2012), including $147 million of non-recourse debtPrice increase announcement in our containerboard sectorStrategic and Financial InitiativesMajor investments in several of our folding carton and microlithography plants and announcement of the closure of the Lachute (Québec) folding carton plantPermanent closure of the napkin plant located on McNicoll Street in TorontoGreenpac project machine installation proceeding as planned with expected start-up in July 2013Extension and amendment of existing revolving credit facility resulting in lower interest costsEstablishment of a Small Shareholder Program for registered shareholdersMr. Alain Lemaire, President and Chief Executive Officer, had the following comments on the third quarter results and near-term outlook:"The results for our third quarter did not meet our expectations due to a strong Canadian dollar, operational issues, higher recycled office paper costs and a stronger seasonal decline in activity level in Europe.Our Tissue Papers Group continued to contribute positively but was impacted by the increase in the average cost of its raw materials, namely white grades recycled papers. Our Specialty Products Group posted stable results. In Europe, shipments decreased significantly. As previously highlighted, downtimes, which are usual during this period of the year, have been longer in 2012 due to important investments undertaken at certain mills and lower order inflows. Financial results of our Containerboard Group show a sequential increase. However these results should have been better given the decline in recycled paper costs. During the last few quarters, operational problems at two of our manufacturing mills resulted in higher production and external supply costs. Downtime taken in September to address these problems further contributed to subpar performance. As a result, we were not able to fully benefit from the usual seasonality inherent to the third quarter and from more favorable recycled fiber prices.In the short term, fundamentals in our sectors are positive. In the containerboard sector, the recent price hike announcement will contribute positively to our results during the next quarter with full implementation in the beginning of 2013. Demand in the tissue papers segment continues to be robust. The European market remains difficult but we are satisfied with progress made to improve our production assets following recent investments. Finally, we do not expect a significant increase in the level of recycled paper prices in the short term. For these reasons, prospects for the current quarter are encouraging despite the inherent seasonality associated with the month of December."Financial SummarySelected consolidated information   (in millions of Canadian dollars, except amounts per share) (unaudited)Q3/2012Q3/2011Q2/2012     Sales906947944Excluding specific items 1    Operating income before depreciation and amortization (OIBD or EBITDA) 787984 Operating income 333337 Net earnings (loss)7(2)7 per common share$0.07$(0.02)$0.08 Cash flow from continuing operations (adjusted) 446140 Margin (OIBD or EBITDA)8.6%8.3%8.9%As reported    Operating income before depreciation and amortization (OIBD or EBITDA)835377 Operating income36729 Net earnings (net loss)5(20)7 per common share$0.05$(0.21)$0.08 Cash flow from continuing operations (adjusted)426037Note 1 - see the supplemental information on non-IFRS measures.             Segmented OIBD excluding specific items   (in millions of Canadian dollars) (unaudited)Q3/2012Q3/2011Q2/2012     Packaging Products    Containerboard262723 Boxboard Europe71011 Specialty Products151315  485049     Tissue Papers351839     Corporate Activities(5)11(4)     OIBD excluding specific items787984  Results analysis for the three-month period ended September 30, 2012 (compared to the previous year)In comparison with the same period last year, sales decreased by 4% to $906 million as of result of lower volumes, lower average selling prices and an unfavorable CAD/Euro exchange rate which more than offset the net impact of business acquisitions over divestitures and closures.Operating income, excluding specific items, remained stable compared to Q3-2011 at $33 million as the above-mentioned factors were counterbalanced by lower raw material costs. On a segmented basis, our three sectors in North America surpassed their 2011 third quarter's results. The third quarter is often softer in Europe and our Boxboard sector recorded lower operating income due to longer downtimes this year. When including specific items, the operating income amounted to $36 million in comparison to $7 million for the same period of last year. During the third quarter of 2011, foreign exchange gain on working capital items following the rapid depreciation of the Canadian dollar at the end of the quarter, combined with foreign exchange gain of approximately $14 million on the consideration received from the sale of Dopaco, had a significant impact on our operating income.In the third quarter of 2012, these specific items impacted our operating income and/or net earnings (before tax):a $6 million unrealized gain on financial instruments (impact on operating income and net earnings);a $1 million loss resulting from impairment charges (operating income and net earnings);a $2 million expense related to accelerated depreciation of assets due to restructuring measures (operating income and net earnings);a $5 million foreign exchange loss on long-term debt and financial instruments (net earnings).For further details, see the following tables on IFRS and non-IFRS measures reconciliation included herewith.Net earnings excluding specific items amounted to $7 million ($0.07 per share) in the third quarter of 2012 compared to a net loss of $2 million ($0.02 per share) for the same period in 2011. Including specific items, net earnings amounted to $5 million ($0.05 per share) compared to a net loss of $20 million ($0.21 per share) for the same quarter in 2011.Results analysis for the three-month period ended September 30, 2012 (compared to the previous quarter)In comparison to the previous quarter, sales decreased by 4% mostly due to the impact of lower volumes, lower average selling price, unfavorable foreign exchange rates and the impact of mill closures. Excluding specific items, operating income decreased by $4 million to reach $33 million primarily due to the above-mentioned factors that more than offset a decrease in raw material costs. Net earnings for the quarter remained stable at $7 million.Net debt decreased by $43 million to $1,542 million due to a favorable exchange rate with regard to our debt and free cash flows generated.Dividend 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 December 13, 2012 to shareholders of record at the close of business on November 30, 2012. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada).In the third quarter of 2012, Cascades purchased for cancellation 75,500 shares at an average price of $4.76 representing an aggregate amount of approximately $0.4 million.Conference call and additional informationManagement will comment the 2012 third quarter financial results during a conference call to be held today, November 8, 2012, at 10:00am ET.Financial analysts, investors, media and other interested individuals are invited to listen to the conference call by dialing 1-866-865-3087. 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 November 16, 2012 by dialing 1-855-859-2056 and by using access code 34725598#.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.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. CONSOLIDATED BALANCE SHEETS(in millions of Canadian dollars) (unaudited)September 30,2012 December 31,2011Assets  Current assets  Cash and cash equivalents1612Accounts receivable570      535Current income tax assets2224Inventories494516Financial assets286Assets held for sale-12 1,1301,105Long-term assets  Investments in associates and joint ventures228219Property, plant and equipment1,6551,703Intangible assets196185Financial assets1125Other assets5744Deferred income tax assets142119Goodwill and others336328 3,7553,728Liabilities and Equity  Current liabilities  Bank loans and advances9690Trade and other payables533539Current income tax liabilities32Current portion of provisions for contingencies and charges55Current portion of financial liabilities and other liabilities9220Current portion of long-term debt6549 794705Long-term liabilities  Long-term debt1,3971,358Provisions for contingencies and charges3233Financial liabilities43111Other liabilities288249Deferred income tax liabilities90107 2,6442,563Equity attributable to Shareholders  Capital stock482486Contributed surplus1614Retained earnings581615Accumulated other comprehensive loss(91)(86) 9881,029Non-controlling interest123136Total equity1,1111,165 3,7553,728CONSOLIDATED STATEMENT OF EARNINGS For the 3-month periodsendedSeptember 30,For the 9-month periodsendedSeptember  30,(in millions of Canadian dollars, except per share amounts and number of shares)(unaudited)2012201120122011Sales      906      9472,7412,712Cost of sales and expenses                  Cost of sales (including depreciation and amortization of $47 million for the 3-month period (2011-$46 million)and $141 million for the 9-month period (2011-$129 million))      781      8482,3612,428Selling and administrative expenses      92      91286266Gain on disposals and others      -      -(1)(10)Impairment charges and restructuring costs      1      15620Foreign exchange loss (gain)      2      (22)2(21)Loss (gain) on derivative financial instruments      (6)      8(7)7       870      9402,6472,690Operating income      36      79422Financing expense      25      247575Foreign exchange loss (gain) on long-term debt and financial instruments      5      (5)(2)5Share of loss (earnings) of associates and joint ventures      1      (1)(3)(11)Profit (loss) before income taxes      5      (11)24(47)Provision for (recovery of) income taxes      1      107(25)Net earnings (loss) from continuing operations including non-controlling interest for the period      4      (21)17(22)Net earnings (loss) from discontinued operations for the period      -      (2)(2)113Net earnings (loss) including non-controlling interest for the period      4      (23)1591Net loss attributable to non-controlling interest      (1)      (3)(3)(3)Net earnings (loss) attributable to Shareholders for the period      5      (20)1894Net earnings (loss) from continuing operations per common share                   Basic      $0.05      $(0.19)$0.21$(0.20) Diluted      $0.05      $(0.19)$0.21$(0.20)Net earnings (loss) per common share                   Basic      $0.05      $(0.21)$0.19$0.98 Diluted      $0.05      $(0.21)$0.19$0.96Weighted average basic number of common shares outstanding      94,056,848      95,986,98994,223,99196,317,941                   Net earnings (loss) attributable to Shareholders:                   Continuing operations      5      (18)20(19) Discontinued operations      -      (2)(2)113Net earnings (loss)      5      (20)1894CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the 3-month periods endedSeptember 30,For the 9-month periods endedSeptember 30,(in millions of Canadian dollars) (unaudited)2012201120122011Net earnings (loss) including non-controlling interest for the period4(23)1591Other comprehensive income (loss)     Translation adjustments      Change in foreign currency translation of self-sustaining foreign subsidiaries(13)31(18)7  Change in foreign currency translation related to net investment hedging  activities15(33)14(14)  Income taxes(2)5(2)2 Cash flow hedges      Change in fair value of foreign exchange forward contracts(10)(9)(7)(5)  Change in fair value of interest rate swaps10(7)6(8)  Change in fair value of commodity derivative financial instruments(4)4(3)(1)  Income taxes-3-2 Actuarial loss on post-employment benefit obligations(36)(53)(61)(53)  Income taxes10141714Other comprehensive loss(30)(45)(54)(56)Comprehensive income (loss) including non-controlling interest for the period(26)(68)(39)35Comprehensive income (loss) attributable to non-controlling interest for the period(4)-(8)(2)Comprehensive income (loss) attributable to Shareholders for the period(22)(68)(31)37     Comprehensive income (loss) attributable to Shareholders:      Continuing operations(22)(66)(29)(76)  Discontinued operations-(2)(2)113Comprehensive income (loss)(22)(68)(31)37CONSOLIDATED STATEMENTS OF EQUITY For the 9-month period ended September 30, 2012(in millions of Canadian dollars)(unaudited)CapitalstockContributedsurplusRetainedearningsAccumulatedothercomprehensivelossTotal equityattributable toShareholdersNon-controllinginterestTotalequityBalance—Beginning of period48614615(86)1,0291361,165 Comprehensive income (loss)         Net earnings (loss)--18-18(3)15  Other comprehensive loss--(44)(5)(49)(5)(54) --(26)(5)(31)(8)(39) Dividends--(11)-(11)-(11) Stock options-1--1-1 Redemption of common shares(4)1--(3)-(3) Acquisition of non-controlling interest--3-3(5)(2)Balance—End of period48216581(91)9881231,111                 For the 9-month period ended September 30, 2011(in millions of Canadian dollars)(unaudited)CapitalstockContributedsurplusRetainedearningsAccumulatedothercomprehensivelossTotal equityattributable toShareholdersNon-controllinginterestTotalequityBalance—Beginning of period49614576(37)1,049231,072 Comprehensive income (loss)         Net earnings (loss)--94-94(3)91  Other comprehensive income (loss)--(39)(18)(57)1(56) --55(18)37(2)35 Dividends--(12)-(12)-(12) Stock options-(1)--(1)-(1) Redemption of common shares(7)---(7)-(7) Business acquisitions-----129129 Acquisition of non-controlling interest--1-1(2)(1) Dividends paid to non-controlling interest-----(1)(1)Balance—End of period48913620(55)1,0671471,214CONSOLIDATED STATEMENTS OF CASH FLOWS For the 3-month periods endedSeptember 30,For the 9-month periods endedSeptember  30,(in millions of Canadian dollars) (unaudited)2012201120122011Operating activities from continuing operations    Net earnings (loss) attributable to Shareholders for the period5(20)1894Net loss (earnings) from discontinued operations for the period-22(113)Net earnings (loss) from continuing operations5(18)20(19)Adjustments for     Financing expense25247575 Depreciation and amortization4746141129 Gain on disposals and others--(1)(10) Impairment charges and restructuring costs(1)14118 Loss (gain) on derivative financial instruments(6)11(6)11 Foreign exchange loss (gain) on long-term debt and financial instruments5(5)(2)5 Provision for (recovery of) income taxes1107(25) Share of loss (earnings) of associates and joint ventures1(1)(3)(11) Net loss attributable to non-controlling interest(1)(3)(3)(3) Net financing expense paid(15)(14)(65)(65) Income taxes paid(10)(4)(20)(13) Dividends received5-5- Others(14)-(22)(1) 426012791Changes in non-cash working capital components12(19)(16)(89) 54411112Investing activities from continuing operations    Investments in associates and joint ventures-(45)(19)(47)Purchases of property, plant and equipment(33)(31)(114)(90)Proceeds on disposal of property, plant and equipment1082010Change in other assets(2)40(29)9Business acquisitions, net of cash acquired-(3)(14)(4)Proceeds on disposals of business, net of cash disposed---6 (25)(31)(156)(116)Financing activities from continuing operations    Bank loans and advances86729Change in revolving credit facilities(38)(9)104(266)Purchase of senior notes--(3)-Payments of other long-term debt(5)(4)(43)(13)Increase in other long-term debt1-21Redemption of common shares(1)(4)(3)(8)Partial disposal of a subsidiary to non-controlling interest--3-Acquisition of non-controlling interest(1)(2)(2)(2)Dividends paid to the Corporation's Shareholders(3)(4)(11)(12) (39)(17)54(271)Change in cash and cash equivalents during the period from continuing operations(10)(7)9(385)Change in cash and cash equivalents from discontinued operations, including proceeds on disposal during the period(3)-(5)390Net change in cash and cash equivalents during the period(13)(7)45Cash and cash equivalents—Beginning of period2918126Cash and cash equivalents—End of period16111611SEGMENTED 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 activities 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. SALES For the 3-month periodsendedSeptember 30,For the 9-month periodsendedSeptember  30,(in millions of Canadian dollars) (unaudited)2012201120122011Packaging Products     Containerboard299317883994 Boxboard Europe181221593539 Specialty Products197224608645 Intersegment sales(17)(27)(54)(82) 6607352,0302,096Tissue Papers253221737638Intersegment sales and others(7)(9)(26)(22)Total9069472,7412,712           OPERATING INCOME (LOSS)BEFORE DEPRECIATION AND AMORTIZATION For the 3-month periodsendedSeptember 30,For the 9-month periodsendedSeptember  30,(in millions of Canadian dollars) (unaudited)2012201120122011Packaging Products     Containerboard24176552 Boxboard Europe883035 Specialty Products1594126 4734136113Tissue Papers351710643Corporate12(7)(5)Operating income before depreciation and amortization8353235151Depreciation and amortization(47)(46)(141)(129)Financing expense(25)(24)(75)(75)Foreign exchange (loss) gain on long-term debt and financial instruments(5)52(5)Share of earnings (loss) of associates and joint ventures(1)1311Profit (loss) before income taxes5(11)24(47)     PURCHASES OF PROPERTY,PLANT AND EQUIPMENT For the 3-month periods endedSeptember 30,For the 9-month periods endedSeptember  30,(in millions of Canadian dollars) (unaudited)2012201120122011Packaging Products     Containerboard16114730 Boxboard Europe9101922 Specialty Products361015 28277667Tissue Papers121317Corporate96148Total purchases383510392Proceeds on disposal of property, plant and equipment(10)(8)(20)(10)Capital-lease acquisitions(4)(3)(4)(4) 24247978Purchases of property, plant and equipment included in trade and other payables     Beginning of period9152518 End of period(10)(16)(10)(16)Purchases of property, plant and equipment net of proceeds on disposal23239480SUPPLEMENTAL 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, accelerated depreciation of assets due to restructuring measures, 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.The 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 share1 Q3/2012Q3/2011Q2/2012 Q3/2012Q3/2011Q2/2012        As per IFRS5 (20)7 $0.05 $(0.21)$0.08Specific items :       Impairment charges1 141 $ - $0.10$0.01Restructuring costs-14 $ - $0.01$0.03Unrealized loss (gain) on financial instruments(6)112 $(0.04)$0.10$0.01Accelerated depreciation and amortization due to restructuring measures2 -1 $0.01 $ -$0.01Foreign exchange loss (gain) on long-term debt and financial instruments5 (5)(5) $0.05 $(0.05)$(0.05)Share of loss (earnings) of associates, joint ventures and non-controlling interest-1(2) $ - $0.01$(0.01)Included in discontinued operations, net of tax-2- $ - $0.02$ -Tax effect on specific items and other tax adjustments-(6)(1) $ - $ -$ - 2 18- $0.02 $0.19$ -Excluding specific items7 (2)7 $0.07 $(0.02)$0.08Note 1 - Specific amounts per share are calculated on an after-tax basis.       Per share amounts of line item "Tax effect on specific items and other tax adjustments" only include the effect of tax adjustments. 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)Q3/2012Q3/2011Q2/2012    Net earnings5(20)7Net loss from discontinued operations for the period-2-Net loss attributable to non-controlling interest(1)(3)(1)Share of loss (earnings) of associates and joint ventures1 (1)(2)Provision for income taxes1 105Foreign exchange loss (gain) on long-term debt and financial instruments5 (5)(5)Financing expense252425    Operating income36729Specific items :   Impairment charges1141Restructuring costs-14Unrealized loss (gain) on financial instruments(6)112Accelerated depreciation and amortization due to restructuring measures2-1 (3)268    Operating income - excluding specific items333337Depreciation and amortization, excluding specific items454647Operating income before depreciation and amortization(OIBD or EBITDA) - excluding specific items787984The following table reconciles cash flow provided by (used from) operating activities to cash flow (adjusted) from operations excluding specific items:     Cash flow from operations(in millions of Canadian dollars) (unaudited)Q3/2012Q3/2011Q2/2012    Cash flow provided by (used from) operating activities544133Changes in non-cash working capital components(12)194Cash flow (adjusted) from operations426037Specific items, net of current income tax   Restructuring costs213Excluding specific items446140  SOURCE: CASCADES INC.For further information: Media:  Christine Beaulieu  Director of communications  819 363-5161 Source:  Allan Hogg Vice-President and Chief Financial OfficerInvestors:  Riko Gaudreault  Director, Investor relations  514 282-2697 Also follow us on social medias: Website: www.cascades.com Twitter: twitter.com/@CascadesInvest Facebook : facebook.com/Cascades YouTube : youtube.com/Cascades