Domtar posts net quarterly earnings of $31 million

Domtar Corporation has reported net earnings of $31 million for the second quarter of 2010 compared to net earnings of $58 million for the first quarter of 2010 and net earnings of $48 million for the second quarter of 2009. Sales for the second quarter of 2010 amounted to $1.5 billion.

"We continue to execute remarkably well to deliver strong financial results. I am pleased that these efforts, coupled with our successful debt tender, have been recognized by rating agencies," said John D. Williams, President and Chief Executive Officer. Commenting on strategic initiatives, Mr. Williams added, "We continue our work to streamline our portfolio; we exited the coated groundwood paper business and successfully closed the sale of our Wood business. We also announced an exciting and innovative partnership in the development of fiber-based nanotechnologies. As we continue to look for opportunities to address our issues of cyclicality and the secular decline of paper demand, our strong balance sheet provides us with financial flexibility to consider various options to create sustainable, long term value for our stockholders."

Second Quarter Notable Items

• Loss on sale of the Wood business of $50 million ($50 million after
  
  tax)


• Costs for debt repurchase, including premium paid, of $40 million
  
  ($24 million after tax)


• Charge of $14 million ($9 million after tax) related to the impairment
  
  and write-down of property, plant and equipment


• Closure and restructuring costs of $5 million ($4 million after tax)


• Gain on sale of property, plant and equipment of $2 million ($2 million
  
  after tax)

Domtar expects third quarter paper shipments to be flat compared to the second quarter, before gradually declining towards year-end due to seasonal factors. Selling prices for paper grade pulp are expected to come under pressure. As previously communicated, costs related to planned maintenance shutdowns will be materially reduced in the third quarter. Inflation on input costs is expected to be marginal for the second half of the year.

Source: Domtar