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A Cascades plant is seen in Laval, Que. Cascades, North America’s fourth-biggest producer of tissue, said its delivery struggles were felt chiefly in Canada.Paul Chiasson/The Canadian Press

Cascades Inc. is warning its latest quarterly profit will come in lower than previously expected because of increased disruptions related to COVID-19 – the packaging and tissue maker’s second such warning in six weeks.

Adjusted operating income before depreciation and amortization will come in at $62-million for the fourth quarter, the company said in a statement before markets opened Monday. That’s about 30 per cent less than the $87-million in earnings it had forecast in a separate downward revision on Dec. 22.

The Kingsey Falls, Que.-based company blamed a “rapid escalation” of the Omicron variant over the last two weeks of December, which it said compounded existing problems with worker availability as well as transportation and supply chain challenges. The difficulties triggered an immediate increase in costs, unplanned production pauses and “unprecedented challenges with product deliveries,” the company said.

“The ramifications from the ongoing disruptions related to the pandemic, and the continuing challenges in delivering products, have resulted in considerable direct and indirect impacts and costs, often unpredictable, in our business segments,” Cascades chief executive Mario Plourde said in a statement. “With current trends suggesting that the Omicron variant is moderating, we are hopeful that pressures will begin easing through the first quarter.”

Scores of companies in different industries are experiencing labour and supply chain issues tied to a lack of workers as the pandemic’s latest wave forces more of them into self-isolation. Some restaurants in Quebec have said in recent days they won’t be able to keep their regular hours when they reopen this week because they’re understaffed.

Cascades, North America’s fourth-biggest producer of tissue, said its delivery struggles were felt chiefly in Canada, where the impact of flooding in British Columbia continued to disrupt rail transport and trucking during the quarter.

Frederic Tremblay, an equity analyst at Desjardins, lowered his rating on Cascades shares to “hold” from “buy” on Monday, saying in a note that he believes supply chain and inflation headwinds will continue to put pressure on the company’s results in the near term. In a separate note just days ago, Mr. Tremblay spoke of “encouraging signs” that momentum could build for the company as the year progresses.

Cascades shares fell as much as 6 per cent from their previous close on the Toronto Stock Exchange Monday, ending the day down 5.4 per cent at $12.72. The stock has traded at between $12.60 and $18.48 over the past year.

Hugo D’Amours, spokesman for Cascades, declined to provide more details on the difficulties beyond the published news release. The company is expected to outline a new three-year strategic plan on Feb. 24 in tandem with fourth-quarter results and will give additional information at that time, he said.

Demand for tissue products made by Cascades and other producers has experienced big swings during the COVID-19 crisis, the manufacturer said in an investor presentation last month. And while cost inflation is hitting its containerboard business, the company and other key rivals in that space – International Paper Co., WestRock Co., and Packaging Corporation of America – recently announced price increases that could help shield profit margins.

Cascades employs about 10,000 people across a network of 80 facilities in North America. The company reported a profit of $198-million or $2.04 a share for fiscal 2020 on sales of $5.1-billion.

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