Domtar Corp. Records Resilient Price Momentum for Paper and Pulp Products

SEATTLE (Scrap Monster): Domtar Corporation announced robust first quarter 2018 results, mainly aided by lower maintenance costs and strong price momentum for pulp and paper products.

The company reported net earnings of $54 million or $0.86 per share for the first quarter of 2018. This is when compared with a net loss of $386 million or $6.16 per share during the prior quarter. The net earnings have more than doubled from $20 million or $0.32 per share for the corresponding quarter in 2017. The sales during Q1 2018 totaled $1.3 billion. The manufactured paper shipments surged higher by more than 6% when compared to Q4 2017. Domtar reported $90 million of cash flow from operating activities during the quarter. It must be noted that the company has already announced price hike of $50-per ton on majority of communication grades effective may this year.

ALSO READ: Domtar Corp. Releases 2017 Sustainability Report

John D. Williams, president and chief executive officer noted that the company witnessed higher price realizations in pulp as well as paper businesses. Some of the operations were adversely impacted by severe weather conditions. Constraints in transportation system resulted in higher-than-expected freight costs in the first quarter. However, the short-term outlook for pulp and paper markets continues to be favorable, Williams said. Higher raw material prices and lower selling prices impacted margins of Personal Care sector. Actions are being undertaken to reduce costs, he added.

The announced industry capacity closures are likely to benefit paper shipments during the current year. The announced price increases in paper and pulp segment should also benefit the company during the second half of 2018. Meantime, planned shutdowns at major facilities may result in higher maintenance cost during the upcoming quarters of the year. Higher raw material costs are expected to have negative impact on Personal Care segment.