In comparison with the 1Q 2012, sales in 1Q 2013 increased by 3% to $914 million as of result of higher volumes, the net impact of business acquisitions over divestitures and closures and favorable exchange rates which more than offset lower average selling prices.
1Q operating income, excluding specific items, decreased from $26 million during 1Q 2012 to $24 million for the 1Q 2013 mainly as a result of lower selling prices which negated lower raw material costs and higher volume contribution.
When including specific items, operating income amounted to $20 million in comparison to $29 million for the same period of last year.
The net loss excluding specific items amounted to $4 million in the 1Q 2013 compared to net earnings of $1 million for the same period in 2012. Including specific items, the net loss amounted to $8 million compared to net earnings of $3 million for the same quarter in 2012.
Alain Lemaire, Executive Chairman of the Board, had the following comments on the 1Q results: "As we expected, the 1Q 2013 was similar to what we experienced towards the end of 2012. This quarter was marked by weaker results in the Tissue Papers sector and a negative contribution from our boxboard activities in North America that offset the benefits from improved productivity and price increases in our containerboard activities.
On a segmented basis, maintenance expenses and lower average prices due to increased promotional activities in Canada and increased competition in the US affected our Tissue Papers sector. On the Containerboard front, the operating rate of our containerboard mills has improved during the first quarter. However the current weakness of the Canadian economy impacted our corrugated product business as order levels in Eastern Canada were lower than expected. This Group was also impacted by the production of lower margin products by our boxboard manufacturing mills in North America. In Europe, lower energy prices and higher volumes more than offset the impact of lower selling prices. As for fiber, costs for brown grades and virgin pulp were higher than during the previous quarter which also impacted our results."
In commenting on the outlook, Mr. Lemaire added: "We expect the strategic initiatives we undertook in 2012 to translate into a better performance in 2013, mostly in the second half of the year. In the short term, our Containerboard sector should perform better due to seasonality and improved productivity. Furthermore, the price hike announced in 4Q 2012 has been fully implemented and will be reflected for a full quarter in the second quarter. In addition, the current market environment leads us to believe that the second price increase will be successful. The Greenpac mill is expected to start production early in the third quarter. Within the current market conditions and depending on the progress of the start-up, the results of the mill should begin to have a positive impact on our earnings per share by the end of the year. Despite a challenging environment, our Tissue Papers Group should slightly improve its performance. In Europe, our backlogs haven't been that healthy since 2011 and the recent price increase announcement for certain products bodes well for the future. "
The Board of Directors of Cascades declared a quarterly dividend of $0.04 per share to be paid June 6, 2013 to shareholders of record at the close of business on May 24, 2013.
In the 1Q 2013, Cascades purchased for cancellation 20,300 shares at an average price of $4.54 representing an aggregate amount of approximately $0.1 million.
Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres.