Tuesday, May 5, 2009

Low pulp prices drag Domtar to Q1 loss of $45M US

Low pulp prices drag Domtar to Q1 loss of $45M USThree-month trading for Domtar

Domtar Corp. posted a first-quarter loss of $45 million US Friday, blaming a sharp drop in pulp prices and higher costs for energy and chemicals.

The Montreal-based forestry company, which reports in U.S. dollars, said it lost nine cents per share, compared with a profit of $36 million, or seven cents per share, in the same quarter last year.

Sales were $1.3 billion, down from $1.7 billion a year earlier.

"We continue to face a very hostile environment in pulp, with prices reaching cyclical lows," CEO John Williams said in a news release.

"Our people have responded remarkably well to the mandate of right-sizing the organization, improving its operating performance and reducing procurement costs and discretionary spending," he said.

Domtar recently announced cuts among its executive ranks as well as efforts to streamline its management committee.

The company said market conditions in all its lines of business remain challenging, although the rapid decline of paper volumes in recent months has been abating.

It said pulp prices have been stabilizing in some overseas markets, but inventories remain high.

Domtar, with 11,000 employees, is North America's largest integrated manufacturer and marketer of uncoated freesheet paper, which is used in copiers and fax machines. It also produces lumber and other special and industrial wood products.

Shares of Domtar closed up one cent to $2.16 on the TSX.

With files from The Canadian Press