Aug 10, 2005. /Lesprom Network/. Cascades Inc. reports net earnings of $4 million, or $0.05 per share, including and excluding specific items, for the quarter ended June 30, 2005. This compares with a net loss of $3 million, or $0.03 per share, or net earnings of $5 million, or $0.07 per share, when excluding specific items for the same period in 2004.

Sales increased by 8% during the second quarter of 2005, amounting to $901 million compared with $831 million for the same period last year. The increase is mainly due to the contribution of business acquisitions realized over the course of the last twelve months and also by higher prices for certain of our main products. Operating income amounted to $29 million for the period compared to $27 million achieved last year. Higher prices were mitigated by higher energy prices and transportation costs and by an appreciation of the Canadian dollar.

In millions of Canadian dollars, except amount per share      

 

2Q 2005

2Q 2004

1Q 2005

Sales from continuing operations             

901

831

843

Operating income from continuing operations  

29

27

17

Net earnings                            

4

-3

-

Basic net earnings  per common share   

0.05

-0.03

-

Cash flow continuing operations                               

38

42

31

Commenting on the quarterly results, Mr. Alain Lemaire, president and chief executive officer stated: "Despite rising costs and a very strong Canadian dollar, we were able over the course of the last twelve months to improve our results for every quarter when compared to corresponding periods of the previous year. This improvement in profitability is the consequence not only of the Dopaco acquisition, which is in line with our focus on converting, but also, a result of strategic choices we made in regards to the packaging and tissue sectors. We would also like to underline the positive contribution of employees to our efforts to improve profitability to counter the significant increases in cost. Notwithstanding this improvement in our results, we will continue to closely monitor the performance of our operating units and, in particular, we will take appropriate corrective measures for those whose performance falls below our expectations."

Mr. Alain Lemaire, president and chief executive officer added: "We are currently confronted with a high Canadian dollar as well as with a steady increase in energy prices which in turn have a major incidence on the cost of freight, chemical products and other raw materials. Furthermore, we are facing increased foreign competition in Canada and Europe, combined with declining demand for certain packaging products and printing papers, with no indication that there will be any significant short-term improvement in business conditions. We will continue to adjust our production levels to meet demand. Furthermore, we will continue to execute our non-core asset divestiture program as well as rationalizing our costs, particularly those related to energy."

Founded in 1964, Cascades produces, transforms and markets packaging products, tissue papers and fine papers, composed mainly of recycled fibres. Cascades employs some 15,600 men and women who work in 140 modern and flexible production units located in North America, in Europe and in Asia.