Newspaper article The Canadian Press

Domtar Says Q2 Wasn't Up to Its 'Usual Standards' and Expects Better Results

Newspaper article The Canadian Press

Domtar Says Q2 Wasn't Up to Its 'Usual Standards' and Expects Better Results

Article excerpt

Domtar looks ahead to better third quarter

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MONTREAL - The head of Domtar Corp. says the company wasn't operating to its "usual standards" in the second quarter, resulting in a US$46-million net loss due to lower productivity and higher maintenance costs at its pulp mills.

"Our results in the pulp and paper business fell meaningfully short of our expectations in the quarter that had the busiest maintenance on record with 10 out of our 12 pulp mills taking shut downs," chief executive John Williams told analysts on a conference call Thursday.

Montreal-based Domtar (TSX:UFS), which reports in U.S. currency, had a net loss of $1.38 per share in the second quarter, compared with net earnings of $59 million or $1.61 per share for the second quarter of 2012.

"We didn't operate up to our usual standards, particularly around the start-up phase following the planned outages at several of our facilities resulting in lower pulp productivity," he said.

But Williams added that pulp productivity has improved and he believes operational issues are behind the company, which manufactures and sells fibre-based products including communication papers, specialty and packaging papers and absorbent hygiene products such as infant and adult diapers.

"We're looking at a stronger third quarter," he said. "Earnings from pulp are expected to benefit from lower planned maintenance costs, higher productivity and higher sales volumes."

The company said its sales were down $56 million in the quarter to US$1.312 billion versus $1.368 billion in the second quarter last year.

Domtar's operating loss was $30 million -- at the low end of a warning issued by the company on July 12, when it estimated an operating loss of between US$30 million and US$35 million. That compares with an operating profit of US$49 million in the first quarter of 2013. …

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