Cascades reports improved 1Q results; tissue segment impacted by prices and competitiveness

Cascades has said its first quarter performance improved year-over-year and sequentially, but added its tissue segment results were impacted by lower than average selling prices, increased competitiveness and higher raw material costs.

Sales for the company increased 9% to $1,098m compared with the same time a year earlier.

Operating income before amortisation was $167m, an increase of 114%.

The tissue papers division increased shipments by 7% year-over-year within the “challenging market conditions and market related downtime” taken at the beginning of the year.

However, Mario Plourde, president and chief executive, said that results for the segment were “impacted by lower average selling prices driven by increased competitiveness in several markets, higher raw material prices, and negative operating margin related to the Oregon converting facility that was started in the second quarter of 2017”.

He said: “Our consolidated first quarter performance improved both year-over-year and sequentially in terms of sales levels, shipments and operating income.

“Changes in raw material prices were positive on a consolidated basis both sequentially and year-over-year, while higher transportation costs negatively impacted profitability in our North American operations.”

On a sequential basis, consolidated first quarter results reflected improvements in capacity utilisation, sales, and operating income.

This was driven by a strong performance from the European boxboard division, and was supported by a slight progress in tissue.

Plourde added the company expects profitability levels in its tissue paper division to remain under pressure as a result of the heightened competitive marketplace and rising raw material costs.

He said: “While external factors remain challenging in this segment, we remain focused on managing inventory, growing sales levels in our targeted markets, incorporating lower cost materials in our production processes when possible, and increasing sales levels in our Oregon tissue converting facility where we continue to make positive and measurable progress.

“In Europe, underlying industry fundamentals suggest continued strength, raw material prices continue to be favourable, and both order backlog and order intake levels remain healthy.

“Operationally, we will concentrate on managing raw material costs and countering the trend of increasing transportation costs through optimisation of our transport strategies.”

 

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