August 11, 2010 / 11:01 AM / in 8 years

UPDATE 2-Cascades Q2 profit beats market view; sees strong Q3

* Q2 Sales $998 mln vs est $1 bln

* Q2 shipments up 9 pct

* Sees sequential rise in profit

* Shares slide, mirroring broader market (Adds details, background, analyst comment)

BANGALORE, Aug 11 (Reuters) - Packaging and paper products company Cascades Inc (CAS.TO) posted a better-than-expected second quarter profit on higher demand and selling prices, and forecast a sequential rise in profit.

Cascades’ shares, however, were down 3 percent at C$7.05 in afternoon trade, mirroring the broader fall in the Toronto Stock Exchange.

Toronto’s main stock index fell sharply on Wednesday as commodity prices sank on persisting worries about weaker growth in China and the United States. [ID:nN1121638]

Desjardins Securities analyst Pierre Lacroix said Cascades was probably the best performing stock within the packaging universe in North America.

In the past year, Cascades’ shares have outperformed most of its peers, including Packaging Corp of America (PKG.N), Rock-Tenn Co RKT.N and Temple-Inland Inc TIN.N.

Cascades said it expects higher demand in its seasonally strong third quarter and continued selling price increases will contribute to a sequential rise in profit.

Analysts expect the company, which has swung to a profitable second quarter, to post a higher third-quarter profit, according to Thomson Reuters I/B/E/S.

“Overall huge recovery from the first quarter results,” analyst Lacroix said, “There’s good reasons to believe that the third-quarter performance will be stronger than this quarter.”

While second-quarter results at the company’s packaging products, containerboard and speciality products segments were mostly in line with expectations, the tissue products segment performed better than expected, Lacroix said.

The Kingsey Falls, Quebec-based company’s shipments, which have been rising for at least the past five quarters, increased 9 percent in the quarter.

In the second quarter, Cascades earned C$21 million ($20.4 million), or 22 Canadian cents a share, down from C$30 million, or 30 Canadian cents a share a year ago.

Cascades’ total sales rose 2 percent to C$998 million.

Analysts on average were expecting the company to earn 18 Canadian cents a share on revenue of C$1 billion, according to Thomson Reuters I/B/E/S. ($1=1.030 Canadian Dollar) (Reporting by Isheeta Sanghi in Bangalore; Editing by Don Sebastian)

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