By Johannes Kotilainen
Canadians will soon be reaching for more tissues with the start of cold
and flu season. As a result we can expect to see demand for bathroom and facial
tissues rising. So can runny noses mean cash in investors’ pockets?
When it comes to household products people tend to stick with the brands
they know and trust. KP Tissue Inc.
(TSX: KPT),
with a Market Cap of $140.2 million, is a publicly-traded entity of Kruger
Products LP (KPLP). KPLP’s product line includes the brands Purex, Cashmere,
Scotties and Sponge Towels, which are Canada’s #1 tissue brands. KPT holds
16.5% share in KPLP, which produces disposable tissue products for the home and
away-from-home markets. They are Canada’s first Forest Stewardship Council®
(FSC®) Chain of Custody certified tissue supplier.
In November 2013, KPLP undertook an approximate cost of $2.9 million in
the consolidation of their Gatineau warehouse and Laval distribution operations
resulting in an annual cost reduction of $1.6 million.
KPLP’s reported net income over the past three fiscal years that has
continued to increase. Its 2013 fiscal net income was $48.9 million, up from
$41.4 million in 2012. Its 2013 net income is up 172% from 2011’s net income of
$28.5 million.
KP Tissue Inc. has a current dividend yield of 4.44%. The company
recently released its Q3 financial results showing a 9.8% increase in revenue
from the same period last year, putting their revenue at $267.6 million.
Its stock price may be off its high of last year, but don’t grab that tissue
just yet, or maybe you should depending on the brand. Last year’s cost of
production increased as a result of increasing commodity prices, however sustainability
initiatives can help to insulate against these risks. With Vice President
Steven Sage’s commitment to sustainable practices, it can be expected that sustainability
will drive bottom line savings. They have also been recognized by Hydro-Quebec
for excellence in energy efficiency at their Crabtree plant by reducing energy
usage by 9,200 MWh per year, which should result in a lower energy costs. Knowing
that a company has a solid sustainability initiative and their products are
produced responsibly will only help to encourage the conscientious Canadian
buyer, and increase sales this cold and flu season.
Find out why sustainability
is important in business and investing: http://www.smallcappower.com/posts/why-sustainability-is-important-in-business-and-investing-johannes-green-investing
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