Cascades reports solid 3Q results; tissue division hit by raw material costs

Cascades has reported solid third quarter results but said its tissue division was hit by “rising raw material and logistics costs”.

For the three-month period ended 30 September, it reported sales of $1,172m compared to $1,179m in 2Q 2018 (-1%) and $1,103m in 3Q 2017 (+6%).

This was driven by a 12% increase in the Tissue segment, “reflecting volume improvements, a more favourable sales mix, exchange rate and higher average sales prices during the period”.

Operating income was $78m compared to $73m in 2Q 2018 (+7%) and $51m in 3Q 2017 (+53%).

Mario Plourde, president and chief executive, said: “Strong fundamentals in Containerboard Packaging were the driving factor behind our solid third quarter performance.”

However, he said that the company’s Tissue division results “continued to be impacted by rising raw material and logistics costs, in addition to the capacity-driven competitive reality”.

He said: “While margins in this division were below expectations as a result of these factors and weather-related events, the solid quarterly sales performance highlights the underlying strength of our tissue platform, and supports the strategic investments being made to propel long-term competitive positioning.”

Plourde added the company expects capacity additions and elevated raw material costs will continue to impact the performance of the Tissue segment in the near-term.

“As such, we remain focused on realising recently announced price increases, maximising efficiency, optimising our operational performance, and we remain committed to strategically investing in the modernisation of our asset base to reinforce our market positioning.

“Strategically, we are focused on successfully carrying out our 2018 investment programme.”

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