Cascades easily beats forecasts, helped by improved productivity, weaker loonie
MONTREAL - Cascades easily beat expectations as it swung to a $6-million profit in the fourth quarter after benefiting from improved productivity and a weakened Canadian dollar.
"We ended the year on a stronger note than we anticipated," CEO Mario Plourde said Thursday during a conference call in which he noted that all operating segments contributed to the stronger results.
The manufacturer of green packaging and tissue paper products said it earned five cents per basic and diluted share for the three-month period ended Dec. 31, compared with a loss of 33 cents per share or $32 million a year ago.
Revenues were $958 million, up six per cent from $904 million in the prior year.
Excluding one-time items, it earned $18 million or 19 cents per share, compared to a net loss of $5 million, or six cents per share for the same period in 2012.
Cascades (TSX:CAS) was expected to report nine cents per share in adjusted earnings, according to analysts polled by Thomson Reuters.
The Quebec-based company said its new Greenpac joint venture in Niagara Falls, N.Y., was EBITDA positive in the quarter and should contribute earnings this year after it fully ramps up.
It continues to fine-tune its processes to reduce costs as its tissue paper group tries to make inroads in the U.S. by adding a second tissue paper machine at its mill in Oregon ahead of new plants being added by competitors in the next two years.
"All of this will put us in a better position to benefit from more favourable market conditions, such as higher prices for many or our products and stable recycled fibre, a weakening of the Canadian dollar that improves our competitive position in relation to our foreign competitors and a stronger North American economy," Plourde told analysts.
Still, he said the start of the 2014 fiscal year has been slower than expected as it was hit by severe weather and a two-week shutdown at its Trenton, Ont., containerboard mill due to an equipment failure. Energy and recycled fibre costs have increased but are likely to fall back to a more "acceptable range", he said.
"In short, while we remain cautious about the first quarter, we expect to improve our performance for the third consecutive year in 2014."
For the full year, Cascades earned $11 million or 11 cents per share, compared to a loss of $22 million or 23 cents per share in 2012. Revenues grew to $3.84 billion, from $3.64 billion a year earlier.
Pierre Lacroix of Desjardins Capital Markets said the fourth-quarter results were mainly driven by stronger performances from its containerboard and boxboard groups. Adjusted EBITDA was $105 million, well above analyst forecasts of $85 million and the prior year's $70 million.
The containerboard group generated $46 million, the boxboard Europe group $21 million, speciality products $16 million and tissue papers $32 million.
Cascades produces and sells packaging and tissue products from mostly recycled fibres. Founded in 1964, it employs more than 12,000 workers at more than 100 production units in North America and Europe.
On the Toronto Stock Exchange, Cascades shares gained one cent at $6.99 in Thursday afternoon trading.
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