CASCADES INC. Imperial Capital Global Opportunities Conference September 20, 2012
DISCLAIMER Certain statements in this presentation, including statements regarding future results and performance, are forward-looking statements within the meaning of securities legislation based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation’s products, the prices and availability of raw materials, changes in the relative values of certain currencies, fluctuations in selling prices and adverse changes in general market and industry conditions. This presentation may also include price indices as well as variance and sensitivity analyses that are intended to provide the reader with a better understanding of the trends related to our business activities. These items are based on the best estimates available to the Corporation. The financial information included in this presentation also contains certain data that are not measures of performance under IFRS (“non-IFRS measures”). For example, the Corporation uses earnings before interest, taxes, depreciation and amortization (EBITDA) because it is the measure used by management to assess the operating and financial performance of the Corporation’s operating segments. Such information is reconciled to the most directly comparable financial measures, as set forth in the “Supplemental Information on Non-IFRS Measures” section of our most recent quarterly report or annual report. Specific items are defined as items such as charges for impairment of assets, for facility or machine closures, accelerated depreciation of assets due to restructuring measures, debt restructuring charges, gains or losses on sales of business units, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non- recurring nature. All amounts in this presentation are in Canadian dollars unless otherwise indicated. 2
OVERVIEW – PACKAGING AND TISSUE PRODUCTS Containerboard Specialty Products Tissue Papers Leading packaging and tissue manufacturer with substantial recycling capabilities 3
OVERVIEW – WORLDWIDE ASSET BASE Asset Base Distribution (PP&E per region) Canada 64% USA 21% Europe 15% 4
OVERVIEW – OTHER ASSETS & INVESTMENTS Assets Consideration Accounting • 46% ownership RENO DE MEDICI • Public co: bloc worth ± $30M • Fully consolidated • 73% ownership RECOVERY OPERATIONS • 59.7% ownership GREENPAC PROJECT • $99M investment to date JV IN INDUSTRIAL PACKAGING • 50% ownership • Equity pick-up • 35% ownership BORALEX • Public co: bloc worth ± $110M Most of our investments are not reflected in our EBITDA numbers 5
OVERVIEW – BALANCED PLAY Cascades Q2-2012 LTM Sales 1 : $3,734M Q2-2012 LTM EBITDA 1, 2 : $293M Sales to: Canada US Elsewhere 40% 37% 23% Packaging Tissue Papers 75% of Sales 25% of Sales 58% of EBITDA 42% of EBITDA Boxboard Europe Containerboard Specialty Products 22% of Sales 31% of Sales 22% of Sales 16% of EBITDA 28% of EBITDA 14% of EBITDA Having two core sectors is working to our advantage in the current economic context 1 Adjusted for the full year consolidation of Papersource. 6 2 EBITDA excluding specific items and discontinued operations. Breakdown of sales and EBITDA before eliminations & corporate activities.
OVERVIEW – HEALTHY P&FP SECTORS AND ACCES TO FIBER Top 5 producers' share of capacity Recycled Fiber Sources - 2011 100% 86% 85% 76% 77% Spot 80% Internal and 66% Purchases CAS 20% 60% Recovery 32% 40% Contractual agreements 20% 48% 0% North American European North American Canadian North American coated coated containerboard containerboard tissue boxboard boxboard Two healthiest sectors in P&FP and substantial recycling capabilities 7
OVERVIEW – GREEN LEADERSHIP PLAY RECOVERED PAPER DOWNSTREAM • #1 Canadian collector Recycled fiber usage (2011): 76% (2.9M tons) NA integration rate (2011): 33% (580K tons) PACKAGING • #1 Canadian containerboard producer RECOVERY • #6 North American containerboard producer 23 units • #2 European in coated recycled boxboard TISSUE FINISHED CONVERTING • #1 “green” tissue papers retail brand in Canada PRODUCTS 60 units • #2 Canadian producer • #4 North American producer MANUFACTURING 30 units UPSTREAM NA integration rate (2011): 47% Leadership on the green scene with upstream and downstream integration 8 Including the 6 manufacturing/converting tissue papers units and Reno De Medici’s units.
OVERVIEW – RECESSION PROOF PLAY 2011 U.S. Containerboard End-Users EBITDA (excluding specific items) (M $) 140 Non- 121 127 durables; 120 110 96 107 28% 94 100 Durables; 88 85 84 79 9% 72 72 80 Others 62 Food; 53% 59 10% 60 51 37 40 20 2011 U.S. Tissue Paper End-Users 0 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 GAAP IFRS Away-from- home Recession 31% Retail 69% Strong performance during the economic downturn and less cyclical end-use markets 9
MARKET DYNAMICS – DEMAND Packaging Tissue (billions North American Box Shipments U.S. Total Tissue Consumption ('000 s.t.) ft2) 8,400 460 8,319 424 421 428 421 8,219 8,201 412 411 413 8,200 420 405 8,053 386 387 8,028 374 380 8,000 7,896 7,844 340 7,800 300 7,600 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 Sources: RISI, Fiber Box Association, Paper Packaging Canada. Exposure to relatively stable / growing demand 10
MARKET DYNAMICS – MARKET BALANCE Annual Average Capacity Utilization Rates 100% 96% 92% 88% 84% 80% 76% 2007 2008 2009 2010 2011 U.S. Containerboard Industry U.S. Coated Recycled Boxboard Industry U.S. Tissue Industry Sources: RISI, CEPI Cartonboard, Paper Packaging Canada , Fiber Box Association. Balanced supply/demand equation with utilization rates at approximately 95% 11
MARKET DYNAMICS – PRODUCT PRICES Containerboard - Selected Products ($US/t.c.) 1,000 900 After approx. 30 months of flat pricing, 800 $50/s.t. price increase announced 700 (applicable in September) 600 along with following box price increases 500 400 Jun-12 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Linerboard 42-lb Corrugating medium 26-lb 20-pt clay coated news (recycled folding boxboard) Tissue Papers - Parent Rolls Boxboard Europe - Selected Products ($US/t.c.) (Euro/t.m.) 1,600 1,200 1,100 1,400 1,000 900 1,200 800 700 1,000 600 500 800 Jun-12 Jun-12 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Recycled parent roll Virgin parent roll Coated duplex (GC2) White-lined chipboard (GD2) 12 Source: RISI
MARKET DYNAMICS – RAW MATERIAL COSTS Main Recycled Fiber North Amercian OBM List Prices (US$/ton) 300 290 Current 250 List Prices 200 185 175 150 165 100 90 110 White grades (SOP) 50 Brown grades (OCC) 0 May 09 May 10 May 11 May 12 Jan 09 Mar 09 July 09 Sept 09 Nov 09 Jan 10 Mar 10 July 10 Sept 10 Nov 10 Jan 11 Mar 11 July 11 Sept 11 Nov 11 Jan 12 Mar 12 July 12 Sept 12 EBITDA sensitivity to 15$US or €/s.t. change in recycled fiber costs: ±$48M 13
MARKET DYNAMICS – INPUT COST INFLATION Crude oil Energy prices Natural gas Chemical Products Index Variation (US$) (US$) 7.00 110 40% 100 6.00 90 30% 5.00 80 4.00 70 20% 3.00 60 2.00 50 10% 1.00 40 0.00 30 0% Jan-11 May-11 Jul-11 Jan-12 Jul-12 Mar-11 Sep-11 Nov-11 Mar-12 May-12 July 09 Jan 10 July 10 Jan 11 July 11 Jan 12 Oct 09 Apr 10 Oct 10 Apr 11 Oct 11 Apr 12 Natural gas (US$/mmBtu) Crude oil (US$/barrel) Starch Wax Latex Pigments Plastics Increase over +18 months +16% +3% +8% +28% +3% Financial results impacted by significant variable cost inflation 14 Source: Bloomberg
MARKET DYNAMICS – FOREIGN EXCHANGE Exchange rates US$/CAN$ EURO/CAN$ 1.10 1.00 1.05 0.95 1.00 +49% 0.90 0.95 0.85 0.90 0.85 0.80 0.80 +25% 0.75 0.75 0.70 0.70 0.65 0.65 0.60 0.60 Q1 03 Q3 03 Q1 04 Q3 04 Q1 05 Q3 05 Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 US$/CAN$ Euro/CAN$ EBITDA sensitivity to 1 CAN¢ change: ±$7M 15 Source: Bloomberg
FINANCIAL REVIEW – HISTORICAL PERFORMANCE SALES EBITDA (M CAN$) (M CAN$) 4,500 500 465 4,033 4,025 400 4,000 340 3,877 3,862 314 310 305 3,692 3,625 300 262 259 3,481 250 3,449 229 3,500 3,182 200 3,000 100 2,500 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2003 2004 2005 2006 2007 2008 2009 2010 2011 CANADIAN GAAP IFRS CANADIAN GAAP IFRS Results impacted by challenging market conditions, lower shipments and higher cost input EBITDA excluding specific items but including discontinued operations. Canadian GAAP (not adjusted for IFRS). 2010 and 2011 figures presented under IFRS and exclude discontinued operations of Dopaco. 16
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