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Domtar Announces Earnings, Operating Profit Falls by $60 Million

Friday, April 20, 2001

Press release from the issuing company

Montreal, April 19, 2001 Domtar Inc. today announced net earnings of $34 million or $0.19 per common share for the first quarter of 2001, compared to $72 million or $0.38 per common share for the corresponding period of 2000. Operating profit stood at $78 million versus $138 million in the first quarter of 2000. Net sales increased by 10 % to $954 million compared to $867 million for the first quarter of 2000. In announcing first quarter net earnings of $34 million, the President and Chief Executive Officer, Mr. Raymond Royer, highlighted the effectiveness of efforts undertaken within the Corporation Quality and Productivity Improvement Program over the past few years. "Considering the current state of the economy, this performance is satisfactory, notably in our Papers and Packaging segments. However we will continue to pay a particular attention to the Wood segment, which remains our biggest challenge," said Mr. Royer. The decrease in the operating profit, compared to the same period last year, is mainly due to lower shipments in all segments, to a $20-million increase in energy costs, and to an average drop of 25%, or US$100 per MFBM of softwood lumber prices. Operating profit in the Papers segment reached $79 million in the first quarter of 2001, compared to $111 million for the same period last year, a drop of 29%. The segment's overall performance was affected by, among other things, lower shipments of market pulp and paper and higher energy costs. The inclusion of the sales of Ris Paper, acquired on July 31, 2000, enabled the segment to post an increase of 26% in net sales, which stood at $745 million versus $593 million for the first quarter of 2000. The Wood segment reported an operating loss of $20 million as opposed to an operating profit of $6 million for the same period in 2000. Net sales totalled $87 million compared to $138 million for the same quarter of last year, a decrease of 37%. These results are primarily due to the sharp drop in prices and the decline in shipments. Compared to the same period last year, softwood lumber prices were down an average of US$100 per MFBM, mainly because of the persistent imbalance between supply and demand. Lower shipments are mostly attributable to the start-up of new saw lines at our mills in Malartic and Matagami, as well as to labor disruptions. In the Packaging segment, Domtar's share of Norampac Inc.'s operating profit amounted to $19 million, down 10% compared to the same period in 2000. These results reflect an increase in energy costs and a drop in shipments of containerboard resulting from the economic slowdown The evolution of the economic situation will raise several challenges in all of our segments. Furthermore, in the Wood segment, the end of the Canada-U.S. softwood lumber agreement creates a climate of uncertainty. To counter the downward pressure on market prices and demand, Domtar will continue to consolidate its links with its customers in order to sustain shipment levels, and will carry on with its Quality and Productivity Improvement Program to ensure a superior return for its shareholders.

 

 

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