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Cascades announces results; reports “difficult industry-wide market dynamics” for tissue

Cascades has reported a sales increase up 2% to $1,196m for the fourth quarter of 2018 compared to $1,175m in the third quarter of 2018.

This is an increase of 11% compared to the fourth quarter of 2017.

For the whole of 2018, it reported sales of $4,649m compared to $4,321m in 2017, an increase of 8%.

Mario Plourde, president and chief executive, said: “Cascades is delivering record annual performance in terms of adjusted OIBD and Health & Safety.”

He added that as previously disclosed, fourth quarter performance of the tissue operations were “well below expectations”.

He said: “The results of this segment were negatively impacted by the continued challenging industry and operational conditions, in addition to several non-recurring events that led to higher logistics costs within the platform and higher gas costs for operations on the West Coast.

“Operational difficulties at the St. Helens tissue mill in Oregon also negatively affected performance during the last three months of the year, with these issues leading to inefficiencies at the Scappoose converting facility that it supplies.

“The Corporation reviewed the recoverable value of its assets and recorded an impairment charge of $75m on certain U.S. assets.

“Management has developed an action plan that it is implementing to successfully redress profitability in this group.”

In November, the company announced an investment in the Wagram, N.C. tissue converting facility as part of its capital expenditure plan.

The project involves the installation of new state-of-theart converting lines and the modernisation of several existing lines, with commissioning expected to begin in the second quarter of 2019 and finalised in the first half of 2020.

Plourde added that the outlook for tissue is “not as robust in the near-term”.

“While recent decreases in raw material pricing and the continued implementation of announced price increases in some product sub-segments are positive for this business, any resulting benefits are being counterbalanced by difficult industry-wide market dynamics and operational challenges at our St-Helens mill, in Oregon.

“As such, we expect financial performance will remain under pressure.

“Management is focused on the resolution of these issues, and is currently implementing the actions required – in addition to the modernisation
efforts already underway – to successfully realign the tissue segment’s operational performance with targeted profitability levels.”

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