Cascades has reported sales of $1,134m in Q1 – up $96m from the $1,038m recorded in Q1 2022 – and said it expects results in its tissue papers segment to continue to improve sequentially.
The company said the increase was due to a net benefit of $76m that was driven by higher selling prices in all business segments, and partially offset by a slightly negative consolidated sales mix impact.
It added that the Canadian dollar – US dollar exchange rate was favourable for all businesses, contributing $47m to total sales levels.
However, this was partially offset by a $19m impact related to lower volumes in the tissue papers and specialty products business segments.
An operating Q1 loss of $(80)m compared with $(20)m in Q4 2022 and $(4)m in Q1 2022, whilst first quarter EBITDA (A) increased $76m year-on-year to $134m.
Mario Plourde, President and Chief Executive, said: “We had a solid first quarter. All three businesses contributed to topline growth year-over-year, as benefits from higher selling prices and an advantageous exchange rate more than offset the impacts of a less favourable mix in containerboard and lower volumes in tissue papers and specialty products.
“Higher sales, notably in tissue, and lower raw material costs in our packaging businesses drove higher consolidated profitability levels.”
He added that sequentially, “sales were stable”, with stronger volumes in all businesses counterbalancing the impacts of less favourable sales mixes in containerboard and tissue and lower selling prices in its packaging businesses.
At the end of April, Cascades announced a repositioning of its tissue papers operating platform that will see it close its tissue plants in Barnwell, South Carolina, and Scappoose, Oregon.
Plourde said the decision was “the culmination of an in-depth evaluation of the long-term positioning, competitiveness and performance potential of our tissue operations following disappointing results in recent years”.
“Market conditions in this business have changed significantly, and the closure of these underperforming assets will strengthen not only the operational performance of this business, but its financial and environmental performance as well.”
He added that the 2024 revenue target of approximately $5bn remains unchanged, while the company’s EBITDA (A) and free cash flow objectives have been slightly modified to reflect the announced changes to its business.
Plourde said: “On a consolidated basis, we are expecting slightly lower results in the second quarter, with lower results in our packaging businesses to offset forecasted stronger results in our tissue papers business.
“We expect results in our tissue papers segment to improve sequentially driven by the additional benefits from profitability initiatives, higher selling prices, lower raw material costs and stable demand.”