Lars Lundin has been appointed Senior Vice President Paper and will take up his new role no later than the first of december 2018. He succeeds Nils Ringborg, who will remain part of Group management as advisor to the CEO. "Lars has shown himself to be an excellent manager of change, with years of experience in both production and marketing. His collection of skills will be invaluable in the continued drive to develop our business and I have no doubt that Lars will take Holmen Paper to new heights", says Henrik Sjölund, President and CEO of Holmen. Click Read More below for additional information.
KP Tissue Inc. (KPT) (TSX: KPT) reports the Q2 2016 financial and operational results of KPT and Kruger Products L.P. (KPLP). Kruger Products is Canada’s leading manufacturer of quality tissue products for the Consumer market (Cashmere®, Purex®, SpongeTowels®, Scotties®, and White Swan®) and the Away-From-Home market, and continues to grow in the U.S. Consumer tissue business with the White Cloud® brand and premium private label products. KPT currently holds a 16.2% interest in KPLP.
KPLP Q2 2016 Business and Financial Highlights
* Revenue increased by 5.9% to $295.8 million in Q2 2016 compared to Q2 2015
* Adjusted EBITDA was $35.9 million in Q2 2016 compared to $30.2 million in Q2 2015, up 18.9%
* Foreign exchange negative impact of approximately $1 million on Adjusted EBITDA over the previous year
* Continue to be the market share leader in Canada
* Declared a quarterly dividend of $0.18 per share to be paid on October 17, 2016
* Announced on July 25 a new paper machine investment in Quebec of $55 million
“A combination of several favourable factors resulted in a very solid Adjusted EBITDA performance for the quarter, one of our highest levels since going public. The Consumer segment was the main driver of our Adjusted EBITDA growth of 18.9% over last year,” said Mario Gosselin, CEO of KPT and KPLP.
“For the quarter, the impact of foreign exchange remained a negative factor on Adjusted EBITDA but was offset by higher sales driven primarily by promotional activities, lower pulp and natural gas costs, and the benefit of higher selling prices in the Canadian consumer market which positively impacted the latter part of the quarter. Adjusted EBITDA from TAD products in the U.S. was slightly higher, while Away-from-Home declined slightly.
“For the third quarter, while we anticipate continued benefits from higher selling prices in Canada, the industry remains quite competitive. Consequently, we expect third quarter 2016 Adjusted EBITDA to be higher than the second quarter of 2016,” concluded Mr. Gosselin.
KPLP Q2 2016 Financial Results
Revenue in Q2 2016 was $295.8 million, compared to $279.3 million in Q2 2015, an increase of $16.5 million or 5.9%. The increase in revenue was primarily due to higher sales volumes, the favourable impact of foreign exchange on U.S. dollar sales, and a selling price increase in Canada.
Cost of sales in Q2 2016 increased to $249.9 million compared to $240.4 million in Q2 2015, primarily due to higher sales volumes and the negative impact of foreign exchange fluctuations and increased warehousing costs, partially offset by a decline in USD pulp and natural gas prices. As a percentage of revenue, cost of sales were 84.5% in Q2 2016 compared to 86.1% in Q2 2015.
Selling, general and administrative (SG&A) expenses in Q2 2016 were $22.0 million compared to $21.3 million in Q2 2015. The increase was primarily due to higher sales volumes and the unfavourable impact of foreign exchange. As a percentage of revenue, SG&A expenses decreased to 7.4% in Q2 2016 from 7.6% in Q2 2015.
Adjusted EBITDA in Q2 2016 was $35.9 million compared to $30.2 million in Q2 2015 due to higher sales and lower USD costs for pulp and natural gas, partially offset by higher warehousing and SG&A costs from increased sales, and the net negative impact of foreign exchange. Adjusted EBITDA attributable to the sale of KTG’s TAD products was $12.0 million in Q2 2016 compared to $11.2 million in Q2 2015.
Net income in Q2 2016 was $12.0 million compared to $3.2 million in Q2 2015 primarily due to higher Adjusted EBITDA of $5.7 million, a pension revaluation related to past service cost of $3.4 million in Q2 2015, lower amortized cost of the Partnership unit liability of $1.9 million, and a decrease in interest expense of $1.6 million. These items were partially offset by an increase in depreciation expense of $2.7 million, a decrease in the unrealized foreign exchange gain of $0.6 million, and restructuring costs of $0.4 million.
Total liquidity, representing cash and cash equivalents and availability under the credit line within covenant limitations, was $77.8 million as of June 26, 2016 compared to $58.5 million as of March 27, 2016.