Cascades Inc., a player in the recovery of recyclable materials and the manufacturing of green packaging and tissue paper products, announced recently its financial results for the three months ended September 30, 2010.
Commenting on the third quarter results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "As anticipated, our results continued to recover sequentially after hitting a soft patch in the first three months of the year. Demand remained solid, in line with the usual seasonality and a moderate and uncertain economic recovery. Our North American and European packaging operations benefited from selling price increases implemented during or prior to the third quarter. Of particular note is the fact that our containerboard segment posted its highest quarterly EBITDA since we acquired the full ownership of Norampac in 2006. This achievement is significant considering that the Canadian dollar was around 88 U.S. cents and recycled fibre costs were more than 30% lower in 2006.
In our tissue operations, as a result of very competitive retail markets, we were unable to fully offset the cost inflation through better selling prices. However, all in all, given our diversified business mix and the numerous restructuring measures realized over the years, I am pleased that Cascades continues to generate good net earnings and free cash flow to pay down debt despite high recycled fibre costs and a strong Canadian dollar."
In comparison with the same period last year, sales rose by 6% to $1,028 million resulting from higher selling prices, business acquisitions and a 5% increase in shipments (excluding the impact of the acquisition of the tissue assets of Atlantic Packaging). This was partly offset by the 6% appreciation of the Canadian dollar.
The operating income excluding specific items amounted to $62 million compared to $74 million in Q3 2009. Improved volumes and selling prices were more than offset by the rise of raw material costs and the Canadian dollar. When including specific items, operating income amounted to $58 million in comparison to $76 million in the same period of last year. The improved results in our containerboard segment were more than offset by a lower operating income in our tissue and corporate segments.
Net earnings excluding specific items amounted to $28 million ($0.29 per share) in the third quarter of 2010 compared to $35 million ($0.36 per share) for the same period of last year. Including specific items, net earnings amounted to $30 million ($0.31 per share) compared to $34 million ($0.35 per share) for the same quarter in 2009. Net earnings of the third quarter of 2010 include a $3 million favorable adjustment for income tax provisions of prior periods.
As a result of the appreciation of the Canadian dollar and free cash flow generation, net debt decreased by $37 million compared to June 30th 2010 and by $54 million year-over-year.
