* Q2 adj EPS $2.67 vs est. $1.60
* Q2 rev up 17 pct to $1.55 bln, beats market
* Positive outlook for Q3 - CEO
* Shares rise 8 pct
(Recasts; adds details, analyst comments, share movement)
July 30 Domtar Corp (UFS.TO) (UFS.N) posted a
second-quarter profit that blew past market estimates, helped
partly by higher pulp shipments, and said third-quarter results
would benefit from lower costs, sending it shares up 8 percent.
"Costs related to planned maintenance shutdowns will be
materially reduced in the third quarter," Domtar said in a
Many forestry firms have refrained from restarting mills
due to the high costs involved in keeping them operative.
Earlier in the year, Domtar had warned of higher-than-average
maintenance costs taking a toll on second-quarter results.
"We have a positive outlook on the third quarter," Chief
Executive John Williams added on a conference call with
For StarMine comparative valuations:
Dual-listed Domtar, however, said it expects third-quarter
paper shipments to be flat sequentially. In the second quarter,
pulp shipments rose 25 percent from last year to 486,000 air
dry metric tons.
Shipments are expected to gradually decline towards the
year-end due to seasonal factors, the company said.
BMO Capital Markets analyst Stephen Atkinson said the
company's results also benefited from tax recovery and from
lower pulp inventory levels.
Paper inventory fell 9,000 tons and pulp inventory 95,000
metric tons at the end of June, compared to end-March levels,
the company said.
Cash received in the quarter regarding alternative fuel tax
credits amounted to $368 million.
Higher average selling prices in pulp and paper also added
to the strong second-quarter results.
Northern Bleached Softwood Pulp prices in North America
climbed up 55 percent to a peak of $1,020 per ton in June.
However, selling prices for paper-grade pulp are expected
to come under pressure going forward, Domtar said.
Net income for the quarter fell to $31 million, or 71 cents
a share, from $48 million, or $1.12 a share, in the year-ago
Excluding items, the company earned $2.67 a share. The
results included a loss of $50 million related to its wood
Consolidated sales for the quarter rose 17 percent to $1.55
Analysts on average had forecast earnings of $1.60 a share,
excluding items, on revenue of $1.51 billion, according to
Thomson Reuters I/B/E/S.
In March, Eacom Timber Corp ETR.V acquired the forest
products business of Domtar for C$80 million, plus certain
working capital adjustments. [ID:nN29244352]
Shares of the company were up 7 percent at C$59.66 in
midday trade Friday on the Toronto Stock Exchange, after
touching a high of C$59.89.
(Reporting by Isheeta Sanghi in Bangalore; Editing by
Gopakumar Warrier, Unnikrishnan Nair)