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THE CANADIAN PRESS

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MONTREAL - Recycled tissue paper and packaging producer Cascades Inc. (TSX:CAS) reversed last year's loss with a $34 million third-quarter profit despite lower sales.

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Chief executive Alain Lemaire said the company delivered very strong results in a challenging environment.

The Kingsey Falls, Que., company posted its sixth consecutive quarter of improved results Thursday as net earnings were 35 cents per share for the period ended Sept. 30. That's up from a seven cent loss a year ago when the net loss totalled $7 million.

Excluding specific items, net earnings were $35 million, up from $6 million in the year-ago period.

Sales decreased six per cent to $974 million reflecting a drop in selling prices and shipments, partly offset by the depreciation of the Canadian dollar.

The results beat analyst expectations. Analysts polled by Thomson Reuters had forecast EPS of 24 cents on $977 million in revenues.

The green products and tissue paper producer said it had the highest operating income before depreciation and amortization in the company's history. EBITDA increased 44 per cent to $127 million.

Cascades reduced its net debt by about $90 million during the quarter, and by $216 million since the same period of 2008.

Chief executive Alain Lemaire said the company delivered very strong results in a challenging environment.

While encouraged by the recent improvement in demand and relative stability of most prices, Cascades expects lower volumes in the fourth quarter due to normal seasonality and planned maintenance down time.

"We also remain cautious in regards to short term business conditions given the uncertain economic climate in North America," he said in a news release.

On the Toronto Stock Exchange, Cascades shares closed at $7.74, up 43 cents, or 5.88 per cent.