Cascades has said higher raw material prices, lower jumbo roll sales and new facility construction investments have impacted its first quarter 2017 results.
Sales were stable at $1,006m compared to $1,003m in Q1 2016, while operating income of $31m was down compared to $73 million in Q1 2016.
Margins were impacted by short-term initiatives and timing mismatch ahead of implementation of announced price increases.
President and chief executive Mario Plourde said: “Our first quarter results were hampered by several short-term elements, namely higher raw material prices, our product repositioning and new facility construction initiatives in our Tissue Papers segment, and the ongoing implementation of our ERP platform.
“That said, our packaging operations executed well in the first quarter, with all three divisions delivering improvements in total shipments and capacity utilisation rates on both a sequential and year-over-year basis.”
He added that regarding the company’s tissue activities, first quarter results “were lower on both a sequential and year-over-year basis”.
“This performance reflects higher raw material costs, lower jumbo roll sales in the slower first quarter, ongoing costs associated with our new West Coast USA conversion facility and marketing costs linked to recent product re-branding and repositioning.
“Finally, costs related to our ERP implementation and internal business process optimisations increased significantly on a year-over-year basis and marginally when compared to the previous quarter. These initiatives are progressing well, and we remain focused on finalising them by the end of the year.”
Total net debt levels increased by 6% or $85m sequentially.
Plourde said he expected results in the near-term to benefit from recent price increases, declining raw material costs, improving market fundamentals in Europe and stronger seasonal trends characteristic to both our Containerboard and Tissue activities.
Results in Europe are expected to reflect more favourable market dynamics that have materialised since the beginning of 2017.