Domtar Corporation reports preliminary first quarter 2010 financial results
Monday, May 03, 2010
Press release from the issuing company
Domtar Corporation today reported net earnings of $58 million ($1.34 per share) for the first quarter of 2010 compared to net earnings of $124 million ($2.86 per share) for the fourth quarter of 2009 and a net loss of $45 million ($1.05 per share) for the first quarter of 2009. Sales for the first quarter of 2010 amounted to $1.5 billion.
Excluding items listed below, the Company had earnings before items(1) of $69 million ($1.59 per share) for the first quarter of 2010 compared to earnings before items(1) of $60 million ($1.39 per share) for the fourth quarter of 2009 and a loss before items(1) of $38 million ($0.88 per share) for the first quarter of 2009.
First quarter 2010 items:
Fourth quarter 2009 items:
First quarter 2009 items:
"Despite a still modest economic recovery we recorded strong financial results due to price increases and higher pulp, paper and wood shipments," said John D. Williams, President and Chief Executive Officer. Discussing the Company's operations, Mr. Williams added, "Towards the end of the first quarter, our paper manufacturing system was balanced with our customer demand. We are now operating at full capacity with a lengthening backlog as a result of increased paper demand. We also have built inventories of pulp ahead of the second quarter, as we expect a higher level of maintenance work at our mills and in preparation for the first phase of the recently announced investments at our Kamloops pulp mill that will result in a 41-day shutdown."
The increase in operating income before items(1) in the first quarter of 2010 was the result of higher average selling prices, higher shipments and lower costs related to lack-of-order downtime and machine slowdowns. These factors were partially offset by higher costs for fiber, energy and freight and the impact of an unfavorable exchange rate including hedging.
On October 20, 2009, the Company announced that it would convert its Plymouth NC facility to 100% fluff pulp production by the fourth quarter of 2010. The paper machine has ceased producing uncoated freesheet paper in March and the mill's production will be focused on fluff pulp and roll pulp until the conversion is completed. In connection with this announcement, the Company recognized $13 million of accelerated depreciation in the first quarter of 2010 and is expected to record a further $26 million of accelerated depreciation over the next six months of 2010 in relation to the assets that will cease productive use in October 2010.
The increase in operating loss before items(1) in the first quarter of 2010 was primarily the result of the impact of higher costs and an unfavorable exchange rate including hedging. These factors were offset by higher average selling prices and higher shipments.
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