Apr 28, 2011. /Lesprom Network/. Domtar Corporation reported net earnings of $133 million for the 1Q 2011 compared to net earnings of $325 million for the 4Q 2010 and net earnings of $58 million for the 1Q 2010. Sales for the 1Q 2011 amounted to $1.4 billion. Excluding items listed below, the Company had earnings before items1 of $138 million for the 1Q 2011 compared to earnings before items of $103 million for the 4Q 2010 and earnings before items of $69 million for the 1Q 2010. "Our operations ran well in the first quarter and we were able to overcome the production related issues that affected our 4Q 2010 financial results. We experienced strong paper shipments and continued momentum in pulp markets while keeping our costs under control. The implementation of the recently announced price increases in pulp and for numerous paper grades will help offset the inflation in input costs stemming from rising global materials prices," said John D. Williams, President and CEO. Commenting on capital allocation, Mr. Williams said, "We also resumed our stock repurchase activity in the first quarter and in doing so, we have returned $80 million to shareholders through the combination of stock buyback and regular dividend. Stock repurchases continue to be our preferred method to returning capital to shareholders." Operating income before items was $218 million in the 1Q 2011 compared to an operating income before items of $156 million in the 4Q 2010. Depreciation and amortization totaled $93 million in the 1Q 2011. When compared to the 4Q 2010, paper shipments increased 7% while pulp shipments remained stable. The shipments-to-production ratio for paper was 102% in the 1Q 2011, compared to 97% in the 4Q 2010. Paper inventories declined by 13,000 tons while pulp inventories increased by 3,000 metric tons as at the end of March, compared to year-end levels. Paper deliveries of ArivaTM, Domtar's paper merchants business, increased 1% when compared to the 4Q 2010. The increase in operating income before items in the 1Q 2011 was the result of higher paper shipments, higher average selling prices in pulp and lower maintenance costs. These factors were partially offset by higher unit costs for chemicals, lower average selling prices in paper and the negative impact of a strong Canadian dollar including hedging. Domtar Corporation is the largest integrated manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade, fluff and specialty pulp.