Domtar Rides On Solid Price Momentum & Cost Optimization
Zacks Investment Research | Jun 03, 2018 09:56PM ET
On Jun 4, we issued an updated research report on, Domtar Corporation (TO:UFS) .
The paper & paper products firm continues to benefit from strong price momentum in the Pulp and Paper businesses. Manufactured paper shipments in first-quarter 2018 were 3% higher year over year while average transaction prices for all paper grades increased $3 per ton. Average pulp prices increased $144 per metric ton from the year-ago quarter on solid global demands. Consequently, first-quarter revenues of the Pulp and Paper segment came in at $1,100 million, up 3% year over year.
Sales from the Personal Care segment also improved 6% year over year to $262 million as adult incontinence and infant diaper volumes grew 2% and 4%, respectively. This helped the company to record consolidated first-quarter sales of $1,345 million compared with $1,302 million in the year-earlier quarter, outpacing the Zacks Consensus Estimate of $1,339 million.
Consolidated operating income for the quarter improved to $77 million from $38 million in the year-ago period. Higher productivity, low maintenance expenses and optimization of SG&A expenses were the primary reasons for the year-over-year improvement in operating income.
The company further witnessed an uptrend in prices for uncoated freesheet in April on healthy demand trends. Buoyed by improving growth dynamics, Domtar announced a $40 to $60 price increase on softwood and fluff pulp grades for May shipments in North America and Europe.
Domtar is currently seeking growth through profitable investment opportunities with a commitment to pollution-free environment and sustainable practices. The company is also streamlining the cost structure, improving revenue quality and maintaining a healthy cash flow with a disciplined approach to cash utilization.
With a diligent execution of operational plans, the stock has outperformed the Zacks Investment Research
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