The Quebec paper company Cascades took another hit on the stock market Thursday following the announcement of the shutdown of a tissue paper manufacturing machine at its plant in St. Helens, Oregon.
Posted at 1:00 p.m.
Cascades shares fell 8% during the session to close at $8.51 Thursday on the Toronto Stock Exchange. The stock, which was worth more than $18 in March last year, has just fallen to its lowest level in 52 weeks on the markets.
The decision to stop the operation of a machine was taken after the annual inspection of the installations. The duration of this shutdown remains to be determined and depends on additional verifications surrounding the structural condition of the building.
Cascades’ management is evaluating the financial and operational impacts on its forecasts for the current year and will provide information once this analysis is complete.
This plant has an annual production capacity of 50,000 tons of tissue paper. It is responsible for about 8% of the total tissue paper production capacity at Cascades, according to calculations by analyst Benoit Laprade of Scotia.
This expert points out that the management of Cascades pointed out in particular that there are for “a few weeks” of giant rolls in stock available at the factory, which should help, according to him, to lessen part of the impact of stopping this manufacturing machine in St. Helens.
Although Benoit Laprade stresses that this is definitely a negative development for the company, he says he does not make any changes to his investment thesis since it is impossible to assess the financial impact of the decision. at this stage.
The second machine not concerned
Production of Cascades’ second tissue paper machine in St. Helens, located in a separate building, is not affected.
Cascades’ facilities in St. Helens supply the company’s conversion plants, primarily the one located in Scappoose, also in Oregon. In operation since 2017, the Scappoose converting plant manufactures virgin and recycled toilet paper and paper towels for away-from-home markets.
Three of the seven analysts who officially have Cascades in their sights are offering to buy the stock. Their average target over a 12-month horizon is $11.64, which suggests a return of 25%.
The Kingsey Falls company, in the Centre-du-Québec region, has approximately 10,000 employees in a network of nearly 80 operating units in North America.