Domtar Q2 results impacted by lack-of-order downtime

Pulp & Paper Canada
July 30, 2014
By Pulp & Paper Canada

Domtar Corporation reported net earnings of US$40 million for the second quarter of 2014 compared to net earnings of US$39 million for the first quarter of 2014 and net loss of US$46 million for the second quarter of 2013. Sales for the second quarter of 2014 were US$1,385 million.

Commenting on the second quarter results, John D. Williams, president and CEO, said, “While paper productivity improved from the first quarter, we took fifty-one thousand tons of lack-of-order downtime, which resulted in higher unit costs. Our pulp business benefited from good price momentum and we shipped over ten thousand tonnes from inventory. However, these benefits were more than offset by seasonally higher maintenance activity in our pulp mills."

In the company’s Personal Care segment, results during the quarter were negatively impacted by higher raw material costs. “In addition,” said Williams, “our capacity expansion plan continues to ramp up and we are currently in the process of launching new products for strategic customers."

Operating income before items was US$79 million in the second quarter of 2014, with US$69 million attributed to the pulp and paper segment.

The decrease in operating income before items in the second quarter of 2014 (down from US$83 million in the first quarter) was the result of higher costs for planned maintenance, lack-of-order downtime in papers, lower paper shipments and overall unfavorable exchange rates.

When compared to the first quarter of 2014, manufactured paper shipments decreased 3.1% and pulp shipments increased 5.7%. The shipments-to-production ratio for paper was 99% in the second quarter of 2014, compared to 100% in the first quarter of 2014. Paper inventories increased by 9,000 tons while pulp inventories decreased by 10,000 metric tons at the end of June when compared to March levels.

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