Domtar Corp (UFS) has reported a 400 percent jump in profit for the quarter ended Mar. 31, 2017. The company has earned $20 million, or $0.32 a share in the quarter, compared with $4 million, or $0.06 a share for the same period last year.
Revenue during the quarter went up marginally by 1.32 percent to $1,304 million from $1,287 million in the previous year period. Gross margin for the quarter contracted 85 basis points over the previous year period to 17.56 percent. Total expenses were 96.78 percent of quarterly revenues, down from 98.60 percent for the same period last year. This has led to an improvement of 182 basis points in operating margin to 3.22 percent.
Operating income for the quarter was $42 million, compared with $18 million in the previous year period.
"The Ashdown mill continued to focus its efforts on the production and quality of fluff pulp; we shipped primarily softwood bales in the quarter, but we are making good progress with the qualification of our grades and we're receiving positive feedback from our customers," said John D. Williams, president and chief executive officer. "Our pulp business is growing and becoming more meaningful. We've shipped nearly 25% more tons when compared to the same quarter last year, and current initiatives will support continued profitable growth. Our nearly 2 million tons of high-quality softwood, fluff and specialty market pulp capacity provides us with a scale business that will add momentum to our growth strategy for years to come."
Operating cash flow declines
Domtar Corp has generated cash of $91 million from operating activities during the quarter, down 6.19 percent or $ 6 million, when compared with the last year period.
The company has spent $34 million cash to meet investing activities during the quarter as against cash outgo of $100 million in the last year period.
The company has spent $72 million cash to carry out financing activities during the quarter as against cash outgo of $29 million in the last year period.
Cash and cash equivalents stood at $111 million as on Mar. 31, 2017, up 14.43 percent or $14 million from $97 million on Mar. 31, 2016.
Working capital increases marginally
Domtar Corp has recorded an increase in the working capital over the last year. It stood at $820 million as at Mar. 31, 2017, up 3.27 percent or $26 million from $794 million on Mar. 31, 2016. Current ratio was at 2.13 as on Mar. 31, 2017, up from 2.02 on Mar. 31, 2016.
Days sales outstanding went down to 45 days for the quarter compared with 46 days for the same period last year.
Days inventory outstanding has decreased to 30 days for the quarter compared with 67 days for the previous year period.
Debt remains almost stable
Total debt of Domtar Corp remained almost stable for the quarter at $1,254 million, when compared with the last year period. Total debt was 22.29 percent of total assets as on Mar. 31, 2017, compared with 21.84 percent on Mar. 31, 2016. Debt to equity ratio was almost stable at 0.47 as on Mar. 31, 2017, when compared with the last year. Interest coverage ratio improved to 2.47 for the quarter from 1.06 for the same period last year.
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