Cascades Inc. reported its unaudited financial results for the three-month period ended June 30, 2022.
“Results in our Tissue Papers business highlight the momentum being generated by the profitability initiatives underway. While pricing and mix improvements realized to date helped to mitigate the unprecedented headwinds on the cost side, these initiatives are trailing the pace of the current high inflation environment. These initiatives remain on track to generate important contributions in the back half of 2022, and are being closely monitored and regularly adapted to address the changing cost environment,” said Mario Plourde, President and CEO.
Sales of $1,119 million increased by $163 million compared with the same period last year. This reflects $146 million of combined benefits from improvements in selling prices and sales mix in all business segments. The Canadian dollar – US dollar exchange rate was also favorable for all businesses, contributing $24 million to sales levels on a consolidated basis. These were partially offset by a $16 million impact related to lower volumes in the Containerboard and Tissue Papers business segments.
Cascades generated an operating income before depreciation and amortization (OIBD) of $95 million in the second quarter of 2022, up from $87 million in the second quarter of 2021. On an adjusted basis, second quarter OIBD totaled $91 million, a decrease of $7 million, or 7% from the $98 million generated in the same period last year. This decrease is attributable to higher raw material, production, energy and logistics costs in all segments, the effects of which were not fully mitigated by improvements in selling prices and mix in all businesses.
The main specific items, before income taxes, that impacted our second quarter 2022 OIBD and/or net earnings were:
- $4 million gain from the settlement of a supply agreement in Tissue Papers segment (OIBD and net earnings)
- $3 million foreign exchange loss on long-term debt and financial instruments (net earnings)
For the 3-month period ended June 30, 2022, the company posted net earnings of $10 million, or $0.10 per common share, compared to net earnings of $3 million, or $0.02 per common share, in the same period of 2021. On an adjusted basis, Cascades generated net earnings of $10 million in the second quarter of 2022, or $0.10 per common share, compared to net earnings of $8 million, or $0.07 per common share, in the same period of 2021.
Discussing near-term outlook, Mario Plourde commented, “We are focused on driving benefits from profitability initiatives underway in our Tissue Papers segment. While the level of expected long-term financial contributions remains intact, persistent cost headwinds and adjustments to the implementation timing of announced industry price increases have reduced our forecasted OIBD range for this segment to $25 – $40 million for 2022, from the previously stated $60 – $80 million.”
“As we have previously stated, the Tissue Papers business is expected to return to a trajectory of positive contribution in the upcoming quarters as meaningful benefits from implementation of the profitability initiatives begin to be realized,” he concluded.