Cascades has reported a generally positive outlook in its third quarter results, but said that its tissue segment results were “mixed” following a drop in demand for AfH products due to Covid-19.

For the three-month period ended 30 September 2020, sales were $1,275m compared with $1,285m in the second quarter of 2020 and $1,264m in third quarter of 2019.  

Operating income was $73m compared with $94 million in the second quarter of 2020 and $108m in third quarter of 2019.  

During the period, the company also announced the closure of two tissue production and converting operations in Pennsylvania. 

Mario Plourde, President and Chief Executive, said: “Within an ever-evolving business environment, demand levels for containerboard remained robust.  

“However, results in our tissue business were mixed. As expected, demand remained strong for consumer tissue, while the reverse was true for AfH products given the impact that Covid-19 is having on businesses, restaurants, hotels and schools.  

“This segment, which accounts for approximately 40% of our annual tissue sales, experienced sharp decreases in demand for some products.” 

The company has taken steps to adjust production capacity by “temporarily closing several facilities that serve this market”, and said it continues to evaluate opportunities to adapt some capacity for different products.  

Plourde added: “In light of ongoing ambiguity related to the pandemic, we are cautiously optimistic regarding our performance in the near-term.  

“Demand dynamics in containerboard remain strong. In tissue, usual seasonal softness in the fourth quarter and Covid-19 driven demand contraction in the AfH product categories are expected to translate into weaker sequential performance.  

“Ongoing modernisation initiatives in this business, which include the integration of the Orchids assets and final investments in state-of-the-art converting equipment, are delivering targeted returns and will generate increasing benefits as implementation costs trend down.” 

He added that raw material costs are “expected to continue to be favourable for our businesses”.