Excluding items, the Company had earnings before items of $33 million ($0.95 per share) for the 1Q 2013 compared to earnings before items of $46 million ($1.31 per share) for the 4Q 2012 and earnings before items of $61 million ($1.65 per share) for the 1Q 2012.
"The 1Q results in our paper business were disappointing and this is due to low productivity, resulting in high costs," said John D. Williams, President and CEO.
"While we benefited from better paper pricing than we expected, the reconfiguration of our Marlboro, South Carolina operations resulted in multiple paper grade transfers, upsetting productivity at several of our paper mills. We anticipate a return to a more normalized productivity in the quarters to come." John D. Williams added, "Our personal care business remains on track and the capital investments should start to deliver the expected benefits towards the end of 2013."
Operating income before items was $75 million in the 1Q 2013 compared to an operating income before items of $84 million in the 4Q 2012. Depreciation and amortization totaled $95 million in the 1Q 2013.
The decrease in operating income before items in the 1Q 2013 was the result of higher usage for energy and chemicals, higher unit costs for fiber, lower average selling prices for paper, higher general production costs and higher selling, general and administrative and other expenses. These factors were partially offset by higher volumes for paper, lower costs for planned maintenance, higher average selling prices for pulp and a favorable exchange rate.
When compared to the 4Q 2012, paper shipments increased 2.9% and pulp shipments decreased 3.4%. Paper deliveries of Ariva® increased 9.8% when compared to the 4Q 2012.
The shipments-to-production ratio for paper was 104% in the 1Q 2013, compared to 97% in the 4Q 2012. Lack-of-order downtime and machine slowdowns in papers totaled 8,000 short tons in the 1Q. Paper inventories decreased by 34,000 tons while pulp inventories increased by 16,000 metric tons at the end of March, compared to December levels.
Domtar Corporation designs, manufactures, markets and distributes a wide variety of fiber-based products including communication papers, specialty and packaging papers and adult incontinence products. The foundation of its business is a network of world class wood fiber converting assets that produce papergrade, fluff and specialty pulps.