Investors seem to appreciate the progress made at Cascades and the greater contribution of toilet paper and paper towels to the results of the Kingsey Falls paper mill.
Faced with the presentation of a quarterly financial performance that exceeded expectations, investors pushed Cascades’ stock to a new 52-week high during Thursday’s trading session.
The title of Cascades appreciated by 7% at midday Thursday on the Toronto Stock Exchange.
The big boss of Cascades, Mario Plourde, explains that the spring results generated by the tissue paper sector reflect the commercial and operational initiatives put forward.
The repositioning of the tissue paper production platform aimed at simplifying operations and reducing costs is progressing according to plan, particularly with the recent plant closures in Oregon and South Carolina.
In the containerboard packaging segment – which remains Cascades’ largest sector – Mario Plourde points out that the slightly weaker results largely reflect the decline in indexed selling prices in the industry, the effects of which more than offset the beneficial impact of lower raw material costs.
“Overall operating results were the best for the business since the fourth quarter of 2020, with significantly better results in the tissue paper business offsetting weakness in the boxboard and corrugated segment markets,” commented the analyst. Sean Steuart of TD.
The expert, however, says he’s not terribly surprised by the performance to some degree because the second quarter results of the comparable companies were also impressive and management’s guidance was in his opinion “clearly conservative.”
“The fact remains that Cascades has returned to solid footing and that the recovery in margins in the tissue paper sector – a chronic headache over the past two years – is encouraging,” he adds.
The tissue paper sector should continue to do well in the short term. Cascades’ management is already anticipating a slight increase in performance for the current quarter, which will end at the end of September.
According to management, raw material prices for the tissue paper sector and lower transport costs for all of the company’s activities should be favorable elements for the summer months.
Cascades on Thursday announced adjusted operating profit of 141 million for the months of April, May and June, while analysts had forecast 126 million. Adjusted net earnings per share of 27 cents is also more attractive than the consensus of 25 cents. Adjusted net income was 10 cents per share a year ago.
Institutional investors are also invited to visit the recently modernized facilities at the Bear Island, Virginia plant in mid-September. The management will take the opportunity to take stock of its strategies.