The Cascades paper mill is ready to increase its consumption of recycled paper from Quebec, but it will not be able to do so if the quality of the raw material does not improve.
“We could consume more fiber here now if it were of good quality, but we need to accelerate the investment of sorting centers that have not been modernized to have better fiber,” said the President and Chief Executive Officer. Mario Plourde, during a meeting with the media, Thursday, at the end of the annual meeting of shareholders of the company in the Old Port of Montreal.
“When we make a quality product we find customers, when we do poor quality, often we are limited to certain markets. The recovery market is no different from other markets, “he argued, referring to sorting centers whose recovered paper is unusable due to contamination with other materials and which has been accumulating since China decided she did not want it anymore.
Mr. Plourde also added another condition, which is to increase public awareness.
“We need to start educating more people at home. What can be put in the bin and how to put it in the tank to facilitate the reduction of contaminants at the sorting center? ”
Some shareholders have questioned the decrease in the value of the stock, which reached $ 18 in July 2017 and was around $ 12 at the time of the meeting, a decrease that does not worry at all the senior management.
According to Mario Plourde, the decline is largely due to the reluctance of some shareholders to the company’s massive investment strategy to adapt production, modernize its equipment and solidify its business sectors.
The company is not intimidated by this reaction of some analysts and investors and considers its action “quite” undervalued, according to Mario Plourde.
He said that the company’s choices are winning, that is to focus on hygienic papers, which are growing, and packaging boxes, which are also growing strongly.
“E-commerce is a huge boost to packaging; packaging consumption is increasing by 2 to 3 per cent per year now, so anything that is going to be shipped and mailed in boxes will increase the amount of boxes used, “he said. .
However, Cascades must now extend this strategy to its fabric sector. “We may have been too late in the fabric and now we have to catch up,” he admitted, adding that the company plans to invest $ 125 million in 2018.
To a shareholder who wondered whether the company, at such a value, was coveted by potential buyers, Alain Lemaire, Executive Chairman of the Board of Directors, responded categorically. “The brothers (Lemaire) and other important shareholders do not want Cascades to be sold. We are far from the idea of disposing, “he said.
Then, as he often did in the past, he repeated that “the brothers built Cascades for the employees, for Quebec and it should not be salable.”
For a rare occasion, a representative of the Movement for Education and Advocacy (MÉDAC) went to the microphone not to denounce the remuneration of senior executives of the company and demand greater accountability – which is usually rejected by shareholders – but to support the compensation policy.
“Very rarely, but then, very rarely, we support a compensation policy,” said Willie Gagnon, MÉDAC, speaking.
“You are really better than others in this area,” he said, citing a 33-man salary ratio between the big boss and the average employee wage, which means that the president earns 33 times the average salary of his employees. MÉDAC estimates that an acceptable ratio should be between 20 and 30.
Cascades’ net income fell to $ 61 million or 65 cents per share in the first quarter, compared to $ 161 million or $ 1.70 per share at the same time last year.
Adjusted earnings remained unchanged at $ 12 million or 13 cents per share.
Its quarterly sales increased from $ 1 billion in 2017 to $ 1.1 billion this year.
This 9 per cent improvement is attributed to the 22 per cent increase in the boxboard division, reflecting the consolidation of the Greenpac plant and the increase in average selling prices over the period, as well as 17% growth in flat carton sales in Europe as a result of the increase in average selling prices and the acquisition of PAC Service in January 2018.
Cascades’ Board of Directors declared a quarterly dividend of 4 cents per share, payable on June 6, 2018 to the shareholders of record at the close of business on May 23, 2018.