Our preliminary Domtar quarterly financial report for Q3 2018 is in. Highlights from this third-quarter financial report include:
- Third-quarter 2018 net earnings of $1.57 per share
- Personal Care margin improvement plan expected to result in $25–30 million of annualized benefit
- Hurricane-related impacts of $6 million
Domtar Quarterly Review
Domtar reported net earnings of $99 million ($1.57 per share) for the third quarter of 2018 compared to net earnings of $43 million ($0.68 per share) for the second quarter of 2018 and net earnings of $70 million ($1.11 per share) for the third quarter of 2017. Sales for the third quarter of 2018 were $1.4 billion.
“Our strong performance was driven by accelerating price realizations and margin expansion, particularly, within our Pulp and Paper businesses. Our operations also ran exceptionally well, despite some weather-related outages, with productivity gains across the mill system,” said John D. Williams, president and chief executive officer. “We have strong momentum to close the year on a high note, and the confidence that our Pulp and Paper businesses will enter 2019 in the best position in recent years.”
Commenting on Personal Care, Mr. Williams added, “Escalating raw material costs continue to compress our margins in adult incontinence and baby diapers. As a result, we are accelerating the pace of actions that will improve margins and EBITDA, with a plan that is expected to generate annual benefits of approximately $25 to 30 million, with full effect by the end of 2020. This will include headcount reductions, the permanent closure of our Waco, Texas, facility, and commercial and operational initiatives. The sum of these actions will reduce our cost base and strengthen our long-term competitive position.”
Operating income was $114 million in the third quarter of 2018 compared to operating income of $62 million in the second quarter of 2018. Depreciation and amortization totaled $75 million in the third quarter of 2018.
In the fourth quarter, we expect lower maintenance costs in Pulp and Paper. Paper and Pulp should continue to realize higher prices with our customers following recently announced price increases. Personal Care should benefit from higher volume and our margin improvement efforts while commodity cost inflation is expected to remain at elevated levels.