By Luann Lasalle, The Canadian Press

MONTREAL - Shares in Cascades Inc. (TSX:CAS) increased almost five per cent on Friday after the Quebec-based paper and packaging company (TSX:CAS) reported its sixth consecutive quarter of improved results.

Shares closed up 36 cents, or 4.6 per cent, at $8.10, in trading on the Toronto Stock Exchange. Investors had sent shares up seven per cent, or 51 cents, to $8.25 shortly before noon.

Cascades said lower energy and materials costs helped the recycled tissue paper and packaging producer earn $34 million, despite lower sales.

Net earnings were 35 cents per share for the quarter ended Sept. 30. That compares with a net loss of $7 million or seven cents a share a year ago.

"I'm very, very pleased today to report our sixth consecutive quarter of improved results," CEO Alain Lemaire said Friday during a conference call.

Excluding specific items, third-quarter 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.

Desjardins analyst Pierre Lacroix said Cascades beat his estimate of 25 cents per share of earnings.

The company's CEO said Cascades delivered strong results, despite a challenging economic environment.

"Looking at our performance, I am particularly satisfied that our debt has decreased almost $90 million and that we continue to generate strong free cash flows," Lemaire told analysts during the call.

"Also, we benefited from a pickup in demand and we efficiently controlled our costs. As a result, our profitability improved despite some selling price erosion and rapid rise of our recycled fibre costs and the Canadian dollar."

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.

The company's profits were boosted by strong improvements in three of its four product groups: Boxboard income increased to $22 million from $6 million for the same quarter last year. Containerboard nearly doubled to $42 million from $23 million. Tissue papers increased to $38 million from $22 million.

Lower energy and raw material costs caused operating results from continuing operations to more than quadruple to $76 million despite eight per cent lower sales volumes and reduced prices.

The overall results included specific items such as $5 million in closure and restructuring costs, a $1 million impairment charge and $8 million unrealized gain on commodity financial instruments. The net income also reflects a $3 million foreign exchange loss on long-term debt.

The company revamped its boxboard business in the last year, laying off nearly 1,000 temporary and permanent workers as plants were reorganized or closed.

Cascades reduced its net debt by $88 million during the quarter, and by $216 million since the same period of 2008.

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.

Founded in 1964, Cascades produces, converts and markets packaging and tissue products composed primarily of recycled fibres. It employs 13,000 people in North America and Europe.