Strong revenue with continued cost headwinds
MISSISSAUGA, Ontario, March 07, 2019 -- KP Tissue Inc. (KPT) (TSX: KPT) reports the Q4 2018 and full year 2018 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 15.7% interest in KPLP.
KPLP Q4 2018 Business and Financial Highlights
- Revenue increased by 5.7% to $359.5 million in Q4 2018 compared to Q4 2017
- Adjusted EBITDA was $20.3 million in Q4 2018 compared to $33.7 million in Q4 2017
- Pulp and freight costs continued to escalate in the quarter
- Completed TAD2 financing and the project is progressing on time and on budget
- Signed a multi-year partnership agreement with the NHL
- Declared a quarterly dividend of $0.18 per share to be paid on April 15, 2019
KPLP Full Year 2018 Business and Financial Highlights
- Revenue increased by 7.1% to $1,370.4 million in 2018 compared to $1,280.0 million in 2017
- Adjusted EBITDA was $102.3 million in 2018, down from $144.2 million in 2017
“We are pleased by our strong revenues for the year and for reaching another record level, however high pulp prices and freight costs, prevalent throughout 2018, led to disappointing results for the year. KP Tissue’s countermeasures such as our value creation program and capital projects partially offset these higher input costs. The price increase announced last year in the Canadian consumer business will provide some relief starting in the first quarter of 2019. With the support of a third party consultant, we are initiating an operational excellence program to better leverage our assets, which is projected to result in cost savings of between $15 and $20 million on a run-rate basis by the end of 2020,” said Dino Bianco, CEO of KP Tissue and KPLP.
“Our TAD2 project remains on budget and on track with construction starting this spring, setting the stage for a new growth phase. We are also very proud to have recently signed a multi-year agreement with the NHL allowing us to create innovative and fully integrated programs and promotions to further extend our brand leadership in both Consumer and Away-From-Home”, concluded Mr. Bianco.
KPLP continues to have strong long-term business fundamentals and will benefit from the Consumer Canada price increase implemented in Q4 2018. While the price increase will gain traction in the first quarter, Adjusted EBITDA is anticipated to be lower than the comparable quarter in 2018 due to continued pressure from high input costs.
Source: KP Tissue