KINGSEY FALLS, QC (From news reports) -- Shares of Cascades fell after the company lowered its guidance, citing a convergence of external headwinds and internal execution issues curbing packaging volumes and weighing on first-quarter performance.
Shares were off by 3.3% at 10.71 Canadian dollars ($7.75).
The packaging and tissue products company said Friday that U.S. weather disruptions and volatile swings in transportation and fuel surcharges pushed operating costs higher, while recent geopolitical tensions dampened consumer confidence and spending, leading to softer packaging volumes.
Cascades produces corrugated and specialty packaging, recycled paper, tissue and towel products, which are all materials for shipping, protecting goods and for personal hygiene needs.
Internally, Cascades said its performance was further weighed down by execution inefficiencies in the second half of the first quarter.
The company has begun implementing price increases across its containerboard, uncoated recycled board and select tissue categories, and is evaluating additional pricing strategies to help offset rising costs.
For the first quarter, the company now expects adjusted earnings before interest, taxes, depreciation and amortization of C$115 million to C$120 million, down from a previous range of C$130 million to C$142 million, and below consensus estimates of C$135.2 million.
The updated outlook is driven largely by softer performance in its packaging segment, while tissue results were just under the earlier guidance range, the company said. Cascades is sticking with its longer-term objective of generating C$100 million of profitability improvements by the end of the year.
The company will release results for the first quarter before the market open on May 7.
