Domtar Corporation reports preliminary Q4 and fiscal 2009 financial results
Friday, February 05, 2010
Press release from the issuing company
Domtar Corporation today reported net earnings of $124 million ($2.86 per share) for the fourth quarter of 2009 compared to net earnings of $183 million ($4.24 per share) for the third quarter of 2009 and a net loss of $676 million ($15.72 per share) for the fourth quarter of 2008. Sales for the fourth quarter of 2009 amounted to $1.4 billion. Excluding items listed below, the Company had earnings before items* of $60 million ($1.39 per share) for the fourth quarter of 2009 compared to earnings before items* of $57 million ($1.32 per share) for the third quarter of 2009 and a loss before items* of $20 million ($0.46 per share) for the fourth quarter of 2008.
Fourth quarter 2009 items:
Third quarter 2009 items:
"We had improved pricing for our products in the fourth quarter when compared to the third quarter. In Papers, we recorded another solid performance despite it being a seasonally slower period, with lower volumes and higher maintenance costs. Our paper inventories were reduced for a fifth consecutive quarter contributing to cash flow," said John D. Williams, President and Chief Executive Officer. "We also moved forward with the Canadian Pulp and Paper Green Transformation Program submitting numerous projects to Natural Resources Canada during the quarter. We completed the environmental assessment for one project while six others are currently undergoing their assessments," added Mr. Williams.
Fiscal year 2009 highlights
Commenting on the 2009 performance, Mr. Williams said, "While we faced a high level of lack-of-order downtime and a steep decline in pulp prices in the first half of the year, we benefited from stable prices in papers and kept our inventories low. Meanwhile, our efforts to reduce working capital and lower fixed costs proved to be a catalyst for the second half of 2009. The sustained focus on customers, costs, and cash helped us deliver a stronger company to our shareholders and to start 2010 with optimism."
The decrease in operating income before items* in the fourth quarter of 2009 was the result of higher usage and unit costs for energy and fiber, higher maintenance costs, lower paper and pulp shipments, and higher freight costs. These factors were partially offset by higher average selling prices for pulp and paper, and lower chemical costs.
On October 20, 2009, the Company announced that it would convert its Plymouth, North Carolina facility to 100% fluff pulp production by the fourth quarter of 2010. In connection with this announcement, the Company recognized, under impairment and write-down of property, plant and equipment, $13 million of accelerated depreciation in the fourth quarter of 2009 and is expected to record a further $39 million of accelerated depreciation over the first nine months of 2010 in relation to the assets that will cease productive use in October 2010. The assets of this facility have been tested for impairment and no additional impairment charge was required.
The decrease in operating loss before items* in the fourth quarter of 2009 was primarily the result of higher average selling prices.
Liquidity and capital
As of December 31, 2009, we had completed sales of assets for proceeds of approximately $20 million. We have agreements to sell other non-core assets which we expect to generate approximately $40 million by mid-year. As we continue to strengthen our financial position, we will carefully consider additional non-core asset sales.
Due to the seasonality of the business and the impact of the price increases being implemented, we expect to make working capital investments in the first quarter of 2010.
* Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP
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