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Domtar warns of expected operating loss ahead of Q4 2019 results


January 24, 2020
By P&PC Staff

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Domtar Corporation has warned of weaker financial performance than expected ahead of its fourth-quarter 2019 results, which will be released Feb. 7.

Domtar’s management expects fourth quarter 2019 sales to be $1.2 billion and the operating loss to be between $15 and $19 million. EBITDA before items is expected to be between $74 and $78 million.

“Our fourth quarter results fell short of expectations. We increased market-related downtime to better balance our supply with our customer demand and to accelerate our inventory reduction plan,” says John D. Williams, president and chief executive officer of Domtar.

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“Our inventories are now at optimal levels and our expectation is that our business will return to a balanced level in early 2020 given recent capacity closures.”

The expected operating loss in the fourth quarter 2019 includes closure and restructuring costs of approximately $19 million and depreciation and amortization of $74 million. Adjusting the estimated operating loss for these two amounts yields EBITDA before items.

During the fourth quarter, Domtar repurchased 2.1 million shares for a total cost of approximately $75 million under its stock repurchase program.