Home Page
19:51:33 EDT Fri 24 Oct 2014
Enter Symbol
or Name
USA
CA



Domtar Corp (2)
Symbol C : UFS
Shares Issued 42,523,896
Close 2013-02-01 C$ 78.04
Recent Sedar Documents

Domtar earns $172-million in 2012

2013-02-01 08:41 ET - News Release

Mr. John Williams reports

DOMTAR CORPORATION REPORTS PRELIMINARY FOURTH QUARTER AND FISCAL YEAR 2012 FINANCIAL RESULTS

Domtar Corp. had net earnings of $19-million (54 cents per share) for the fourth quarter of 2012 compared with net earnings of $66-million ($1.84 per share) for the third quarter of 2012 and net earnings of $61-million ($1.63 per share) for the fourth quarter of 2011. Sales for the fourth quarter of 2012 amounted to $1.3-billion.

Excluding items listed below, the company had earnings before items of $46-million ($1.31 per share) for the fourth quarter of 2012 compared with earnings before items (1) of $67-million ($1.87 per share) for the third quarter of 2012 and earnings before items of $93-million ($2.49 per share) for the fourth quarter of 2011.

Fourth quarter 2012 items:

  • Closure and restructuring costs of $27-million ($18-million after tax);
  • Charge of $12-million ($8-million after tax) related to the impairment and writedown of property, plant and equipment and intangible assets;
  • Net losses on the sale of property, plant and equipment of $2-million ($1-million after tax).

Third quarter 2012 items:

  • Closure and restructuring costs of $2-million ($1-million after tax).

Fourth quarter 2011 items:

  • Closure and restructuring costs of $38-million ($23-million after tax);
  • Charge of $12-million ($9-million after tax) related to the impairment and writedown of property, plant and equipment.

"Our paper and pulp businesses performed largely in line with expectations from a sales standpoint in the fourth quarter," said John D. Williams, president and chief executive officer. "Higher costs for fibre and energy and unexpected costs incurred at a pulp mill following a planned maintenance outage affected results."

Fiscal year 2012 highlights

For fiscal year 2012, net earnings amounted to $172-million ($4.76 per share) compared with net earnings of $365-million ($9.08 per share) for fiscal year 2011. The company had earnings before items of $233-million ($6.45 per share) for fiscal 2012 compared with earnings before items of $452-million ($11.24 per share) for fiscal 2011. Sales amounted to $5.5-billion for fiscal year 2012.

Commenting on the year, Mr. Williams said: "The down cycle in pulp prices contributed to the majority of the decline in Domtar's earnings. We accomplished a great deal again in 2012 nevertheless. We completed two acquisitions in our personal care business, we announced the conversion of a world-class commodity paper mill to manufacture specialty papers and launched several innovative projects that provide alternative uses for our wood fibre and the byproducts of our manufacturing process. Our journey to build a growing fibre-based business is well underway," added Mr. Williams.

Quarterly review

Operating income before items was $84-million in the fourth quarter of 2012 compared with an operating income before items of $111-million in the third quarter of 2012. Depreciation and amortization totalled $96-million in the fourth quarter of 2012.


(In millions of dollars)       Q4 2012 Q3 2012

Sales                           $1,327  $1,389
Operating income (loss)                       
Pulp and paper segment              40     103
Distribution segment                (8)     (5)
Personal care segment               13      12
Corporate                           (2)     (1)
Total                               43     109
Operating income before items       84     111
Depreciation and amortization       96      96

The decrease in operating income before items in the fourth quarter of 2012 was the result of lower average selling prices for pulp and paper, higher unit costs for fibre and energy, higher selling, general and administrative, freight, and maintenance costs and lower volumes for pulp and paper. These factors were partially offset by high productivity and lower costs for lack-of-order downtime in paper.

When compared with the third quarter of 2012, paper shipments decreased 2.5 per cent and pulp shipments decreased 7.2 per cent. Paper deliveries of Ariva decreased 10.4 per cent when compared with the third quarter of 2012. The shipments-to-production ratio for paper was 97 per cent in the fourth quarter of 2012, compared with 105 per cent in the third quarter of 2012. Lack-of-order downtime and machine slowdowns in papers totalled 23,000 short tons in the fourth quarter of 2012. Paper inventories increased by 27,000 tons while pulp inventories increased by 3,000 metric tons as at the end of December, compared with September levels.

Liquidity and capital

Cash flow provided from operating activities amounted to $551-million and capital expenditures amounted to $236-million, resulting in free cash flow of $315-million for fiscal year 2012. Domtar's net debt-to-total capitalization ratio stood at 16 per cent at Dec. 31, 2012, compared with 12 per cent at Dec. 31, 2011.

Domtar returned a total of $215-million to its shareholders through a combination of dividends and share buybacks in 2012. Under its stock repurchase program, Domtar repurchased 2,000,925 shares of common stock throughout 2012 and a total of 8,660,703 shares of common stock at an average price of $80.04 since the implementation of the program in May, 2010. At the end of the year, Domtar had $304-million remaining under this program.

Outlook

In 2013, the company expects market demand for uncoated freesheet paper to decline at a 3- to 4-per-cent rate in North America, but the company's shipments are expected to trend slightly better than market due to an exposure to stable specialty and packaging papers and the incremental volume from the supply agreement signed with Appleton. Paper prices are expected to trend at levels similar to year-end while the company expects a slow and steady recovery in pulp prices. The implementation of the company's growth plans in the personal care segment are expected to yield incremental earnings beginning in the fourth quarter of 2013.

Earnings conference call

The company will hold a conference call today at 11 a.m. (ET) to discuss its fourth quarter 2012 financial results. Financial analysts are invited to participate in the call by dialling at least 10 minutes before start time 1-866-321-8231 (toll free -- North America) or 1-416-642-5213 (international), while media and other interested individuals are invited to listen to the live webcast on the Domtar website.

The company will release its first quarter 2013 earnings on April 25, 2013, before markets open, followed by a conference call at 10 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.

                                   CONSOLIDATED STATEMENTS OF EARNINGS
                           (In millions of dollars, unless otherwise noted)

                                                                    Three months ended   12 months ended
                                                                         Dec. 31,            Dec. 31,
                                                                     2012      2011     2012        2011

Sales                                                               $1,327    $1,369   $5,482      $5,612
Operating expenses
Cost of sales, excluding depreciation and amortization               1,058     1,039    4,321       4,171
Depreciation and amortization                                           96        95      385         376
Selling, general and administrative                                     90        87      358         340
Impairment and write-down of property, plant and equipment and
intangible assets                                                       12        12       14          85
Closure and restructuring costs                                         27        38       30          52
Other operating loss (income), net                                       1       (1)        7         (4)
                                                                     1,284     1,270    5,115       5,020

Operating income                                                        43        99      367         592

Interest expense, net                                                   22        20      131          87

Earnings before income taxes and equity earnings                        21        79      236         505

Income tax expense                                                       1        11       58         133

Equity loss, net of taxes                                                1         7        6           7

Net earnings                                                            19        61      172         365

Per common share (in dollars)

Net earnings
Basic                                                                 0.54      1.64     4.78        9.15
Diluted                                                               0.54      1.63     4.76        9.08

© 2014 Canjex Publishing Ltd. All rights reserved.