MONTREAL — Domtar Corp. (TSX:UFS) beat expectations in the third quarter, even though its net income decreased dramatically from a year ago to US$27 million on lower sales.
The Montreal-based pulp, paper and diaper company which reports in U.S. dollars, earned 82 cents per share for the period ended Sept. 30, compared to $1.84 per share or $66 million in the third quarter of 2012. It operates the pulp mill in Kamloops.
Excluding one-time items such as a loss on the sale of a business, adjusted earnings were $41 million or $1.25 per share, a penny better than estimates, but down from $67 million or $1.87 per share in the prior year.
Revenues decreased slightly to $1.375 billion from $1.39 billion a year ago.
The company says the results were negatively impacted by an inventory adjustment at a large retail customer.
Despite the lower year-over-year results, Domtar’s performance was an improvement over the second quarter as it reversed a $46 million net loss on improved pulp productivity and continued growth in personal care earnings. Adjusted profits were $16 million in the prior quarter.
During the quarter, Domtar also finished the reconfiguration of its Kamloops pulp mill and closed the sale of the Ariva U.S. business.
Chief executive John Williams said the long-term prospects for the personal care division remain strong and it is on track to deliver more than $200 million in pre-tax operating income (EBITDA) by 2017 from existing operations.
Domtar said its pulp business should benefit from accelerating momentum in global demand, notably in China, and recently announced price increases for several paper grades.
On the Toronto Stock Exchange, Domtar’s shares gained 29 cents at C$89.17 in Thursday morning trading.