KP Tissue reports strong Q2 2024 performance amid revenue growth and strategic pricing adjustments

KP Tissue Inc. has released its financial and operational results for the second quarter of 2024, covering both KPT and Kruger Products Inc. Kruger Products, a leading Canadian manufacturer of consumer tissue products under brands such as Cashmere®, Purex®, SpongeTowels®, Scotties®, White Swan®, and BonterraTM, also has a significant presence in the U.S. consumer tissue market with its White Cloud® brand and premium private label products. KPT currently holds a 12.7% interest in Kruger Products.

“We delivered as per our expectations in the second quarter of 2024 with revenue-driven profitability generating more than US$65 million in adjusted EBITDA”, said Dino Bianco, chief executive officer of KP Tissue. He highlighted the company’s achievements in the Consumer segment, noting: “In the Consumer segment, we brought added innovation and capacity to the Canadian facial tissue market to build our leadership status with 42.8% share, while maintaining our No. 1 and No. 2 positions in the bathroom tissue and paper towel categories, respectively. We also continued growing our away-from-home business on the strength of increased sales and adjusted EBITDA year-over-year and sequentially. We are pleased with the strong momentum across all our business units, both in Canada and the U.S., despite a labor disruption at our Crabtree, Quebec facility that has since been resolved with a five-year collective bargaining agreement”.

In addressing margin management, Bianco stated: “From a margin management standpoint, we recently announced a pricing increase in our Consumer segment to mitigate escalating pulp prices that are approaching peak levels. This pricing adjustment, along with other productivity initiatives, will ensure we continue to drive profitable growth”.

For Q2 2024, revenue reached US$509.8 million, up by US$43.5 million or 9.3% from US$466.3 million in Q2 2023. This revenue increase was primarily attributed to higher sales volume and a favorable sales mix in the Consumer segment, as well as favorable selling prices across both segments. Additionally, revenue benefited from favorable foreign exchange fluctuations on U.S. dollar sales.

The cost of sales in Q2 2024 was US$431.2 million, a 9.0% increase from US$395.8 million in the same quarter the previous year. This rise was mainly due to higher sales volume and increased manufacturing overhead costs, driven largely by start-up costs associated with the Sherbrooke Expansion Project and reduced inventory levels. Although pulp prices were lower compared to the previous year, freight rates saw a slight decline, while warehousing costs increased due to handling and logistics network costs related to higher sales volume. As a percentage of revenue, the cost of sales was 84.6% in Q2 2024, slightly down from 84.9% in Q2 2023.