Domtar beats expectations as Q3 profits surge despite lower revenues

October 28, 2016

By: Chronicle Herald

Domtar beat expectations as it recorded higher profits in the third quarter despite weaker overall revenues.

The Montreal-based maker of pulp, paper and personal care products said it earned US$59 million, or 94 cents US per diluted share, for the three months ended Sept. 30.

That compared to US$11 million, or 17 cents US per share, a year earlier.

Excluding one-time items such as closure and restructuring charges, adjusted earnings increased 31 per cent to US$71 million or US$1.13 per share.

Overall revenues dipped to US$1.27 billion from US$1.29 billion in the third quarter of 2015.

Domtar (TSX:UFS) was expected to record 97 cents US per share in adjusted profits on US$1.29 billion in profits, according to analysts polled by Thomson Reuters.

The company benefited in the quarter from lower maintenance and raw material costs that was partially offset by lower selling prices and paper shipments.

The pulp and paper segment, which accounts for most of Domtar’s activities, saw operating income surge to US$89 million from US$54 million despite a 3.5 per cent drop in revenues.

Sales in the personal care business, including diapers and feminine hygiene products, grew eight per cent but earnings fell 17 per cent to US$15 million.

Domtar expects the fourth quarter will be hampered by seasonal softness amid volatile pulp prices and higher wood, energy and chemical costs.

By: Chronicle Herald

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