Domtar (UFS) Tops Q4 EPS by 7c

Domtar (NYSE: UFS) reported Q4 EPS of $0.03, $0.07 better than the analyst estimate of ($0.04). Revenue for the quarter came in at $1.24 billion versus the consensus estimate of $1.24 billion.

Earnings affected by lower pulp and paper prices and market related downtime in paper

(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

• Fourth quarter 2019 net loss of $0.59 per share; earnings before items1 of $0.03 per share
• 92,000 tons of market-related downtime in paper
• $80 million of share repurchases

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer said, “Our teams were agile in adjusting to market changes and executed well on things under our control in a challenging market environment. We had strong cash flow generation and our solid financial position allowed us to continue to reward shareholders with a high free cash flow payout ratio, while strategically investing in our assets.”

“Our results in the paper business fell short of our expectations. Shipments remained weak in the quarter due to seasonally slower demand and some customer destocking. As a result, we increased market-related downtime to better balance our supply with our customer demand and reduce our inventory to more optimal levels,” said John D. Williams, President and Chief Executive Officer.

Commenting on Personal Care, Mr. Williams added, “We had a strong finish to a good year. EBITDA1 significantly improved when compared to last year and we reached 12% EBITDA1 margins, which is the highest level since 2017. We expect to build on the momentum from this past year by continuing to focus on the execution of our margin improvement plan and restore and grow the profitability of the business.”

OUTLOOK

In 2020, our paper volumes are expected to trend with market demand while pulp volumes will increase due to higher pulp productivity at our Espanola and Ashdown mills. The Pulp and Paper business will benefit from lower planned maintenance costs. Personal Care is expected to benefit from their margin improvement plan and higher sales following new customer wins. Overall, we anticipate costs, including freight, labor and raw materials, to marginally increase.

For earnings history and earnings-related data on Domtar (UFS) click here.

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