Montréal, January 25, 2001 — Domtar announced today net earnings of $275 million, or $1.49 per common share, for the year ended December 31, 2000, an increase of 69% compared to $163 million, or $0.87 per share in 1999. Operating profit was $476 million, a 26% increase from the $379 million recorded in 1999. Annual net sales were up 17% to $3.6 billion, compared to $3.1 billion in 1999.
During the fourth quarter, net earnings reached $82 million, or $0.45 per common share, compared to $66 million, or $0.35 per common share for the same period in 1999. Operating profit was $97 million compared to $127 million for the fourth quarter of 1999. Net sales amounted to $945 million compared to $814 million in the corresponding quarter of 1999. The fourth quarter 2000 results include a reduction in income tax expense arising from a change in taxation rates in the Province of Ontario and a reevaluation of future income tax assets. These adjustments represent a $0.16 improvement in earnings per share. Fourth quarter numbers include the results of Ris Paper, which was acquired on July 31, 2000.
"We have achieved remarkable results in 2000 with a return on equity (ROE) of 16% and a positive economic value added (EVA®). This is even more impressive considering that we have also doubled our sales and increased our net earnings ten fold since 1997. This significant improvement in profitability has also permitted us to reduce our net debt ratio to 35%, which is lower than the industry average. This performance is the result of an efficient strategy that is centered on creating value for our shareholders and sustained efforts on the part of our personnel to improve productivity and develop new high-quality products and services," said Raymond Royer, President and Chief Executive Officer.
Free cash flow
During 2000, free cash flow reached $345 million, including $60 million related to the sale of receivables (securitization) compared to $125 million for 1999. The improvement in free cash flow was used to reduce debt and buy back common shares. The ratio of net debt to total capital was 35% on December 31, 2000.
Domtar will continue to place its customers' needs at the heart of its strategic decisions by offering them new products and innovative services. In 2001, e-PAPER 2™ will extend our electronic commerce business-to-business (B2B) application even further. Our customer focus approach, which consolidates the Company's links with its customers, will place Domtar in a good position to counter the effects of market fluctuations. With the support of its personnel, Domtar will pursue its quality and productivity improvement program in order to offer its shareholders a superior return.
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.