Dollar hurts Domtar
January 31, 2005 By Pulp & Paper Canada
A sharp rise in the Canadian dollar took a severe toll on Domtar’s 2004 profits. The company recently announced a n…
A sharp rise in the Canadian dollar took a severe toll on Domtar’s 2004 profits. The company recently announced a net loss of $42 million for the year, or $0.19 per common share, compared to a net loss of $193 million, or $0.86 per common share in 2003. When excluding specified items, net loss in 2004 was $33 million, or $0.15 per common share, compared to a net loss of $10 million, of $0.05 per common share in 2003.
President and CEO Raymond Royer pointed to the difficulty Canadian companies are experiencing as a result of the strong Canadian dollar. “These are trying times for companies with a large manufacturing base in Canada whose products are sold in US dollars. Although Domtar has grown its U.S. presence to approximately 50% of its asset base over the last five years, the company has nonetheless suffered from the sharp increase in the value of the Canadian dollar, leading it to post a loss for 2004."
Cost increases for wood and freight, as well as heightened duties for softwood lumber exports to the U.S. are also credited for the company’s loss.
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