Domtar Corporation recenlyreported net earnings of $281 million ($4.33 per share) for the third quarter of 2014 compared to net earnings of $40 million ($0.61 per share) for the second quarter of 2014 and net earnings of $27 million ($0.41 per share) for the third quarter of 2013. Sales for the third quarter of 2014 were $1,405 million.
Excluding items listed below, the Company had earnings before items1 of $61 million ($0.94 per share) for the third quarter of 2014 compared to earnings before items1 of $40 million ($0.61 per share) for the second quarter of 2014 and earnings before items1 of $41 million ($0.63 per share) for the third quarter of 2013.
Deferred tax benefit of $204 million for the settlement of IRS audits, primarily related to Alternative Fuel Tax Credits;
Recognition of $18 million of deferred Alternative Fuel Tax Credits ($18 million after tax); and
Closure and restructuring costs of $2 million ($2 million after tax).
Second quarter 2014 items:
Third quarter 2013 items:
- Loss on sale of business of $19 million ($12 million after tax); and
- Negative impact of purchase accounting of $2 million ($2 million after tax).
"Our financial performance improved when compared to the second quarter, resulting in strong free cash flow generation", said John D. Williams, President and Chief Executive Officer. "Our pulp shipments were sequentially higher, raw material and planned maintenance costs were lower and our paper pricing remained firm in a very competitive environment. Given current market conditions, we continue to manage the business prudently, adjusting our production to our customers' demand through market-related downtime."
"In Personal Care, our third quarter results were affected by some seasonality in our European business as well as the effect of a weaker Euro. We continued to execute on our capital expansion plans, further integrating operational and product improvements and we made good progress with the ramp up of five newly installed machines at three of our facilities."
The increase in operating income before items1 in the third quarter of 2014 was the result of lower raw material costs, higher average selling prices for paper, lower costs for planned maintenance, higher pulp shipments, lower freight costs and higher productivity for pulp. These factors were partially offset by lower average selling prices for pulp and overall unfavorable exchange rates.
When compared to the second quarter of 2014, manufactured paper shipments were flat and pulp shipments increased 9.2%. The shipments-to-production ratio for paper was 102% in the third quarter of 2014, compared to 99% in the second quarter of 2014. Paper inventories decreased by 18,000 tons while pulp inventories increased by 1,000 metric tons at the end of September when compared to June levels.