All financial information in Canadian dollars.
Cascades saw improvements in numerous areas of its financial performance during the second quarter, exceeding company expectations, said CEO Hugues Simon during Thursday’s earnings call. In the packaging segment, total shipments increased 9% sequentially, box shipments increased 6% and external paper shipments increased 11%.
“We’re extremely, extremely tight” in fiber rolls, with demand exceeding what the company can ship, he said.
The results were promising despite impact from geopolitical factors, namely the war with Iran, causing soaring costs for transportation and raw materials. Cascades has seen “unprecedented cost inflation in many of the categories of items that we use,” said Simon. “We’re still in a pretty unstable environment,” but executives expect a stronger second half of the year.
The third quarter typically provides a seasonal lift to Cascades’ results, and Q3 so far is continuing to show Q2’s positive trends, said Simon. “That being said, I think we all know that the geopolitical [situation] might evolve.”
Pricing picks up
Higher selling prices helped boost second-quarter financial results, Simon said, and the company now expects more than $600 million in annual run-rate adjusted earnings before interest, taxes, depreciation and amortization during the second half of 2026.
The implementation of announced price increases is “going as planned,” he said. A few days before the earnings call, Cascades announced its third containerboard price increase of 2026, slated for Sept. 8: $110 per ton for linerboard and white-top and $140 per ton for medium. The tight supply for rolls drove that new increase, Simon said.
This move followed Packaging Corporation of America’s late July announcement of a $140 per ton increase, approximately double the typical hike, which many observers have called unprecedented. Competitors including Smurfit Westrock and International Paper announced their own hikes for $100 per ton and $80 per ton, respectively, days later. This is the industry’s third round of announced containerboard price hikes this year.
Cascades executives extensively discussed the reasoning for these pricing actions, mainly the need to counteract inflation for inputs including recycled fiber. Just this week, the price of OCC went up again, by $5 per ton, Simon said, although “OCC is not behaving the same way in all regions.”
Cascades expects to see positive effects from the new price increases beginning in the fourth quarter. Regarding the prior two increases, Simon noted that they weren’t fully recognized in the market. He pointed to Fastmarkets RISI’s surprising $20 per ton month-over-month decrease for containerboard in February. About 75% of the company’s containerboard customers are contractually bound to price movements.
“We're really adjusting our pricing to the reality of the economy. And maybe for the first time, instead of being behind, we're getting on pace,” Simon said.
Assessing new tariffs
Cascades is still determining the potential business impact from the additional 50% tariff on many imports from Canada that President Donald Trump announced on July 20, set to take effect Aug. 19. Wood products and paper specifically were called out in the proclamations, and analysts surmised that containerboard and boxboard were included as well.
Simon described some uncertainty surrounding exactly which products are affected, although it appears that certain tissue and packaging products are included. He gave an example of how different products of the same fiber grade appear to be treated differently.
“In URB, the small rolls have tariffs, the big rolls don't. ... The devil’s in the details on this potential tariff implementation,” he said. “We're tracking the details on what the U.S. administration wants to include, exclude — understanding that this is a couple of weeks from now, and that [it] may evolve over time.”
If the tariff terms stay as-is and the company’s mitigation efforts go according to plan, the financial impact will not represent more than 5% of adjusted EBITDA run rate, Simon said.
The company has had ample experience with tariffs over the last year and a half, Simon said, explaining that last year nearly all of Cascades’ products moving from Canada to the U.S. incurred duties. Cascades drew on its prior tariffs strategy when devising the current one, and Simon believes putting the new mitigation plan in place should go faster.
“The mitigation plan that we have is not something that's going to take six to 12 months to implement. It doesn't get implemented all the first week, but it's a rather quick implementation,” Simon said.
