Domtar Declines on Operating Loss as Costs Increase

Domtar Corp. (UFS), a Canadian pulp and paper manufacturer, fell after reporting an unexpected second-quarter operating loss as maintenance costs increased and pulp productivity fell.

Domtar, based in Montreal, dropped 2.2 percent to C$74.59 at the close in Toronto today. The shares have declined 10 percent this year.

The company said it expects to report an operating loss in the second quarter of $30 million to $35 million on sales of $1.31 billion. Analysts projected an operating profit of $64 million and revenue of $1.36 billion, according to average estimates compiled by Bloomberg.

“We had sub-optimal pulp productivity and unusually high costs due to significant planned maintenance and delayed restarts in our pulp mills,” Chief Executive Officer John Williams said in a statement. “We remain confident that we will return to more normalized productivity levels across the business by the end of the third quarter.”

The company said its operating loss in the quarter included $18 million in closing and restructuring costs and a $49 million charge to settle litigation.

Domtar is scheduled to release its second-quarter earnings results on July 25 before the markets open in Toronto.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Simon Casey at scasey4@bloomberg.net

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