Domtar Corporation (NYSE/TSX: UFS) today reported net earnings of $43 million ($0.08 per diluted share) for the third quarter of 2008 compared to net earnings of $24 million ($0.05 per diluted share) for the second quarter of 2008 and $36 million ($0.07 per diluted share) for the third quarter of 2007.
Sales for the third quarter amounted to $1.6 billion. Excluding the items listed below, the Company earned $51 million ($0.10 per diluted share) for the third quarter of 2008 compared to $32 million ($0.06 per diluted share) for the second quarter of 2008 and $44 million ($0.09 per diluted share) for the third quarter of 2007.
Third quarter 2008:
- Costs of $10 million ($6 million after tax) related to synergies and integration; and
- Closure and restructuring costs of $3 million ($2 million after tax).
Second quarter 2008:
- Closure and restructuring costs of $11 million ($7 million after tax);
- Costs of $9 million ($5 million after tax) related to synergies and integration; and
- Gain of $6 million ($4 million after tax) related to the sale of trademarks.
Third quarter 2007:
- Costs of $14 million ($8 million after tax) related to synergies and integration;
- Gains of $6 million ($4 million after tax) related to financial instruments;
- Cost of $3 million related to a change in statutory income tax rates; and
- Closure and restructuring costs of $2 million ($1 million after tax).
"I am encouraged by the results, which we achieved despite high input costs, weak fine paper demand and a worsening economic environment. Our earnings increased from last year's third quarter, our free cash flow is strong, our balance sheet is sound with no upcoming debt maturities and we were recently upgraded by credit agencies in tough credit market conditions," said Raymond Royer, President and Chief Executive Officer. "Our team is executing well and our prudent approach to managing the business provides us with a measure of stability. I am pleased with the support we are getting from customers as we position ourselves as an efficient, stable, financially strong supplier of choice," added Mr. Royer.
SEGMENT REVIEW
Papers
Operating income before items(2) was $131 million in the third quarter of 2008 compared to operating income before items(2) of $106 million in the second quarter of 2008. Depreciation and amortization totaled $111 million in the third quarter. When compared to the second quarter, paper and pulp shipments decreased 5.1% and 6.3%, respectively. The shipments-to-production ratio for papers was 97% in the third quarter, compared to 99% in the second quarter. Paper inventories were 24,000 tons higher at the end of September when compared to end of June levels.
The increase in operating income before items(2) in the third quarter was the result of higher average selling prices for paper, lower usage for energy and chemicals, lower costs related to planned maintenance shutdowns, a favorable exchange rate and lower other costs. These factors were partially mitigated by higher costs related to chemicals, freight, fiber and energy, and lower paper and pulp shipments. -- www.cnxmarketlink.com
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