Cascades Reports Results for the Second Quarter of 2021
Q2 2021 Highlights (comparative figures have been restated to reflect discontinued operations2)
*Sales of $956 million (compared with $942 million in Q1 2021 (+1%) and $1,020 million in Q2 2020 (-6%))
*As reported (including specific items)
**Operating income of $23 million (compared with $44 million in Q1 2021 (-48%) and $64 million in Q2 2020 (-64%))
**Operating income before depreciation and amortization (OIBD)1 of $87 million (compared with $109 million in Q1 2021 (-20%) and $127 million in Q2 2020 (-31%))
**Net earnings per share of $0.02 (compared with $0.22 in Q1 2021 and $0.57 in Q2 2020)
Mario Plourde, President and CEO, commented: “Our second quarter results were below expectations, with the sequential shortfall driven by our tissue segment. This reflected several factors, the most prominent being $12 million due to higher raw material costs and $9 million related to the net impact of sales prices and mix variance in the current period. We continued to see lower demand levels in tissue in the quarter, notably in US consumer retail product categories, as customers worked through inventories built up throughout 2020 in response to COVID-19 demand volatility. Operationally, we made the decision to temporarily curtail some tissue converting production in June to manage inventories. Notwithstanding the tissue results this quarter, we see current demand contraction as being an interim response to COVID-19 volatility given the essential nature of these products. Looking ahead, the modernization completed across our tissue platform has equipped this segment to generate important benefits when demand levels begin to normalize. On the packaging side, the Containerboard and Specialty products businesses delivered good results. Higher selling prices in Containerboard that reflect only two of the three announced price increases, coupled with good volume, were however not sufficient to fully cover raw material and production cost inflation in the second quarter, while benefits from volume growth in Specialty products more than offset the impact of higher raw material costs. A less favourable foreign exchange rate impacted the performance of all our businesses in the second quarter.
We completed an important step in our strategic plan this quarter with the announced monetization of our 57.6% equity position in Reno de Medici. This move underscores our commitment to creating long term value for the Corporation and our shareholders, and is aligned with our objective of focusing on our core North American packaging and tissue businesses. The expected net proceeds of $461 million from the transaction will improve financial flexibility and support our initiatives aimed at improving the financial performance and competitive positioning of our North American businesses. We remain dedicated to prudently and strategically deploying capital to enhance our operational platforms, while also optimizing our capital structure and evaluating opportunities to increase shareholder return including aligning our dividend return with industry averages. To this end, we are pleased to announce that we are increasing our quarterly dividend by 50% to $0.12 per share as of the second quarter of 2021, reflecting our confidence in our long-term free cash flow generation and operational performance. On an annual basis, this translates into a dividend of $0.48 per share, and increases our yield to approximately 3%.”
details at: https://www.cascades.com/en/news/cascades-reports-results-second-quarter-2021-increases-dividend-50