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Domtar faces ‘unprecedented’ challenges


October 31, 2005
By Pulp & Paper Canada

Disappointing Q3 results have prompted Domtar to make some drastic changes, both on an organizational and economic …

Disappointing Q3 results have prompted Domtar to make some drastic changes, both on an organizational and economic level. The company posted a net loss of $52 million, and suspended dividends as a result. The elimination of the six-cent dividend marks the first time in 13 years the company has taken such a course of action.

“The current business environment and changing markets pose unprecedented challenges for our industry,” remarked Raymond Royer, president and CEO. “We continue to be focused on cost reduction, and, as it stands, the company today has achieved 80% of its goal on delivering annualized targeted savings of $100 million by the end of 2005.”

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Unfortunately, and as Royer confirmed, these savings were wiped out by high energy, fibre, chemical and transportation costs. Domtar has said that cost related issues have been severely aggravated by the strong Canadian dollar and that it doesn’t anticipate the situation will improve any time soon.

The company has, as of yet, not confirmed the definite closure of any facility in particular, but that mill shutdowns are a likely possibility and that decisions about these and other cost reduction measures will be announced before the end of the year.

The company appointed Richard Garneau to the position of executive vice president of operations, where he will be conducting an in-depth review of the company’s operations with a focus on cost reductions.


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