February 3, 2012 / 12:50 PM / 8 years ago

UPDATE 2-Domtar Q4 profit falls on weak pulp prices

(Adds details, forecast, analysts estimates)

Feb 3 (Reuters) - Paper and pulp producer Domtar Corp’s quarterly profit fell 80 percent, hurt by weak pulp prices and lower paper shipments, and said pulp prices are likely to remain depressed.

The Canadian paper maker is trying to ramp up its personal care business as falling pulp prices weigh on its core business. Wood pulp futures has fallen more than 11 percent in last year to trade at its lowest levels in two years.

Montreal-based Domtar expects demand for fine papers, used for commercial and digital printing, to decline 2 to 4 percent in North American in 2012.

The company said its fourth-quarter paper earnings were hit by the seasonal slowdown .

Domtar is one of North America’s largest producers of uncoated freesheet papers, used primarily in office stationery.

October-December net income fell to $61 million, or $1.63 a share, from $325 million, or $7.59 a share, a year ago.

Excluding items, the company earned $2.49 a share.

Analysts on average had expected earnings of $2.15, according to Thomson Reuters I/B/E/S.

Sales remained flat at $1.37 billion. Pulp and paper sales fell 3 percent to $1.17 billion.

Last week, Domtar said it was buying diaper maker Attends Healthcare’s European business, a few months after it acquired its North America’s operations.

Domtar recently sold an idled Quebec plant to Fortress Paper .

On Thursday, its U.S.-based rival International Paper reported a quarterly profit that topped market estimates and said business activity had improved in the first quarter.

Domtar shares, which have gained nearly a fourth of their value in the last six months, closed at C$89.45 on Thursday on the Toronto Stock Exchange. (Reporting by Ankur Banerjee in Bangalore; Editing by Don Sebastian)

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