Domtar’s Q1 adjusted earnings miss analyst estimates by wide margin

MONTREAL – Domtar Corp. says it’s disappointed with how its paper business performed in the first quarter, resulting in adjusted earnings that came in well below analyst estimates.

The Montreal-based the paper and forest product company (TSX:UFS) reported Thursday that its adjusted earnings were $33 million or 95 cents per share — down from $61 million or $1.65 a share a year earlier.

The adjusted profit was 47 cents short of a consensus estimate of $1.42 per share. Net income before adjustments, which is less closely watched by analysts, was also below the consensus estimate of $1.33 per share.

Domtar’s net income for the quarter was $45 million or $1.29 per share, about 60 per cent above the year-earlier profit of $28 million or 76 cents per share. Both quarters in each year had several unusual items.

Sales for the three months ended March 31 were $1.345 billion, which was slightly better than estimates.

“The first quarter results in our paper business were disappointing and this is due to low productivity, resulting in high costs,” John Williams, Domtar’s president and chief executive officer, said in a statement.

Domtar benefited from better paper pricing than expected but productivity at several mills was upset by the reconfiguration of its operations in Marlboro, S.C., Williams said.

“We anticipate a return to a more normalized productivity in the quarters to come.”

The company’s outlook calls for moderate improvements in pricing for pulp and steady shipments. Paper volumes are expected to be similar to the first quarter in the near term.

Domtar shipped 828,000 tons of paper in the first quarter, down from 870,000 tons a year earlier. Pulp shipments fell to 372,000 ADMT, down from 389,000 air-dried metric tonnes.