Founded in 1964, Cascades specializes in the production, conversion and marketing of packaging and tissue products composed of recycled fibers.
Earlier this year, the company reported its fourth quarter and year-end 2020 financial results, recording sales of nearly $1.3 billion ($1,284 million, compared to $1,275 million in the third quarter of 2020 and $1,227 million in the fourth quarter of 2019). Sales at the end of last year were more than $5.1 billion ($5,157 million, compared to $4,996 million in 2019, a three percent increase).
Mario Plourde, President and CEO of Cascades stated that the team is very pleased with the fourth quarter performance, “Adjusted consolidated OIBD of $166 million exceeded our cautious outlook for the period, represented an increase of two percent sequentially and nine percent year-over-year, and drove annualized profitability to a record level for the third consecutive year. These results demonstrate strong operational execution within the context of a challenging environment, benefits being realized from our continuous margin improvement initiatives, and the resilience and dedication of our employees throughout the COVID-19 challenges. Sequentially, the fourth quarter performance was driven by a solid contribution from the container segment, itself fueled by stronger than expected demand on both the manufacturing and converting side. The tissue segment also generated good results, with stable retail tissue demand helping to offset low levels of demand for out-of-home products as a result of COVID-19. The tissue segment generated a solid adjusted OIBD margin of 10.5% in the fourth quarter, despite continued challenging market conditions. The specialty products and European paperboard segments generated slightly lower results in the quarter”.
Compared to the same period last year, sales of $1,284 million grew by $57 million, or five percent, and this was driven by strong demand.
Higher results compared to the same period last year reflected a more favorable sales mix and price increases, the effects of which more than mitigated the effects of lower COVID-19-related volumes and higher raw material costs.
The recycled fiber prices remain stable, while virgin pulp prices are expected to increase due to recent movements in the price index.
Cascades’ near-term outlook is positive despite continued uncertainty related to the pandemic. Plourde says: “Demand levels remain strong which, combined with recent industry price increases, should help offset commodity price headwinds. In tissue, stronger than expected volumes in December, usual seasonal softness in the first quarter, and unfavorable demand impact in COVID-19-related out-of-home products should translate into weaker sequential performance”.
For Cascades, the year 2021 will be busy due to the Bear Island project, which will represent the bulk of the investment program. “We will also be finalizing modernization investments in our tissue converting operations, with all of these projects encompassed in our $450 to $475 million capital program for 2021”, reports the CEO.