Domtar (UFS) Misses Q4 EPS by 5c, Revenues Miss

Domtar (NYSE: UFS) reported Q4 EPS of $0.34, $0.05 worse than the analyst estimate of $0.39. Revenue for the quarter came in at $920 million versus the consensus estimate of $1.16 billion.

• Fourth quarter 2020 net loss from continuing operations of $0.29 per share; earnings from continuing operations before items1 of $0.34 per share
• $135 million of cash flow from operations
• Announced sale of Personal Care Business to American Industrial Partners for $920 million

“Our paper shipments were in line with the third quarter and order activity remained stable across all channels, while paper pricing was consistent with the year-to-date average. In Pulp, we improved our cost performance, which is attributable to lower maintenance costs, our cost reduction program and favorable wood costs. Market fundamentals continue to improve, and we announced several pulp price increases in the first quarter of 2021.”

Mr. Buron added, “In Personal Care, we had a strong finish to the year with improved fourth quarter performance driven by strong sales of adult incontinence products in North America and a good performance in Europe following the seasonality impact of the softer summer period. We announced the sale of the Personal Care Business to American Industrial Partners for $920 million, and we expect the transaction to close in the first quarter of 2021.”

OUTLOOK

In 2021, paper demand remains uncertain and dependent upon the Covid-19 recovery, in particular quarantine measures impacting the return to office and school. We expect near-term pulp markets to gradually improve driven by better demand, maintenance outages and restocking in China. Overall raw material costs are expected to moderately increase and freight costs are also expected to be higher.

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

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